It's a real bloodbath -- one that tech has probably not seen since the internet bubble burst in 2000.
This disaster can be measured by different parameters. One set is the individual fortunes at stake.
At the end of 2021 and the beginning of 2022, the rankings of the world's richest men were dominated by Elon Musk and Jeff Bezos, respectively chief executive of Tesla (TSLA) and founder and executive chairman of Amazon (AMZN).
Musk's net worth was estimated at $270 billion and Bezos's at $192.3 billion by the Bloomberg Billionaires Index. A year later, Musk is second and Bezos is fifth. Bezos's fortune stands at $106 billion, down $86.3 billion in one year. Musk's net worth plummeted by $140 billion over the same period to $130 billion.
Now, it is Bernard Arnault, chairman and CEO of luxury-goods specialist LVMH Moet Hennessy, (LVMUY) whose fortune is biggest, estimated at $159 billion.
Bezos is tied with legendary investor Warren Buffett (BRK.A) (BRK.B). He's behind the Indian businessman Gautam Adani ($116 billion) and Bill Gates ($109 billion), the co-founder of Microsoft (MSFT).
The tech moguls will no doubt take comfort in that they still dominate six of the top 10 positions, but their hegemony is no longer what it was a year ago. Mark Zuckerberg, CEO of social-media giant Meta Platforms META, was ejected from the top 20. His net worth dropped $80.7 billion to $44.8 billion.
Tech Billionaires Are Seeing Red
Usually, it is tech, a growth sector, that hires and attracts talent. In 2022, however, tech has offloaded huge amounts of talent. Massive cuts in perks, jobs and outlays have become the credo in Silicon Valley and all tech hubs. Austerity reigns.
Meta, formerly known as Facebook, cut jobs for the first time since it was created in 2004. More than 11,000, or 13%, of the company's employees were dismissed in early November.
"The macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected. I got this wrong, and I take responsibility for that," Zuckerberg wrote to employees in a blog post at the time.
"In this new environment, we need to become more capital efficient," the billionaire said. "We’ve cut costs across our business, including scaling back budgets, reducing perks, and shrinking our real estate footprint. We’re restructuring teams to increase our efficiency," he added.
E-retail and cloud giant Amazon slashed staff. It had hired aggressively during the pandemic as the global economy moved online due to the societal restrictions designed to prevent covid-19 from spreading. The new austerity mantra has not spared the group's cash cow: the AWS cloud division.
'Super Hard for All of Us': Former AMZN Engineer
"Unfortunately, I was impacted by today's layoff with 10,000 other Amazonians. It is super hard for all of us and I am still trying to navigate through this, while constrained by the timeline of being on a #visa," wrote Shivani Parate on LinkedIn in mid-November. She was a software-development engineer at Amazon.
Apple (AAPL), Microsoft, Alphabet (GOOGL), Lyft (LYFT), Shopify (SHOP), Stripe, Coinbase (COIN), Gemini, Tesla: The fear of losing a job has resurged.
That feeling had disappeared for many years as everyday life became tech-dependent. But the reopening of the economy, the Russian war in Ukraine, the energy crisis in Europe, and inflation, which is at its highest for more than 40 years, have changed the landscape.
Central banks worldwide have found a single remedy for the unstoppable increases in the prices of goods and services: aggressive interest rate hikes.
In the U.S., for example, interest rates have not been this high since 2008. The Federal Reserve has taken the benchmark rate from almost zero during the pandemic to a range between 4.25% and 4.5%.
Higher rates crush growth companies' ability to invest in current and new projects.
"Macro conditions are difficult: energy in Europe, real estate in China & crazy Fed rates in USA," Musk recently said, in an apparent effort to explain Tesla's stock-market rout.
Overall, the stock market has seen a similar decline: Apple, Microsoft, Alphabet, Amazon, Tesla and Meta, which were six of the world's 10 largest companies measured by market capitalization, have lost collectively more than $4.5 trillion in value this year.
In detail, Tesla is down almost $800 billion, Amazon's market value has dropped almost $900 billion, Apple has decreased by nearly $760 billion, Alphabet by $748 billion, Microsoft by $740 billion and Meta's market value has shrunk by almost $600 billion.
As a result, Tesla was ejected from the top 10 of the world's largest companies, along with Meta. Amazon is no longer part of the trillion dollar club.
What's in the Cards for 2023? Very Hard to Know.
Consumers tend to spend on tech products and services when things are going well. But as soon as the economic situation deteriorates, they turn cautious, favoring necessary purchases, often to the detriment of tech.
It's hard to know what's in the cards for tech in 2023, as many economists and business leaders are predicting a recession.
That might hammer consumer spending. But at the same time, investors often choose to reward companies that drastically cut costs. Since it announced job cuts on Nov. 9, Meta has seen its stock gain almost 16%.
Stay tuned.
