LLast week was a bad time to be a tech billionaire. When the pandemic drove the world online, the founders of Facebook, Google and Microsoft reaped wealth gains dubbed “pornographic” and cemented their position among the wealthiest cohort to ever tread the planet. Well, the “good times” are over. Kind of.
The world’s biggest tech companies announced their latest results last week, and for the most part the news was bad. Meta (formerly Facebook), Alphabet (formerly Google) and Microsoft saw billions disappear from their values as investors began to worry that the tech titans’ best days were behind them. As investors headed for the exit, the five biggest tech stocks tumbled $950bn (£820m) to their lowest point. The slide also hit the fortunes of their creators.
Facebook co-founder Mark Zuckerberg’s fortune plunged $11 billion on Wednesday after Meta Platforms reported a second straight quarter of disappointing results. The company’s shares fell by a fifth – a steep depreciation that brought Zuckerberg’s overall decline in wealth this year to more than $87 billion. The numbers may only be arithmetically mishandled – 38-year-old Zuckerberg is still worth around $38 billion, according to Bloomberg – but that’s a striking drop from the $142 billion he could count on in September 2021 Almost all of his wealth is tied up in stock Meta; he owns more than 350 million shares. On Thursday, Zuckerberg ranked 28th on Bloomberg’s list, down 25 places from his previous ranking at third place.
Meta’s 71% drop in value this year is due to many factors, including ad tracking controls instituted by Apple, a slowdown in digital ad spending, the challenge of Facebook-owned Instagram by TikTok, and the Meta’s multi-billion dollar investment in the Metaverse – the virtual world it throws money at despite a less than warm reception, even from its own staff.
This investment has troubled investors. Zuckerberg said he expects the project to lose “significant” money over the next three to five years. On Wednesday, he asked for patience.
“I think we’re going to work out each of these things over different periods of time,” Zuckerberg said. “And I appreciate patience, and I think those who are patient and invest with us will eventually be rewarded.” Wall Street seems quite impatient.
CNBC TV anchor Jim Cramer, who has been a booster for Meta, looked on the verge of tears after the latest results were released. “I made a mistake here,” Cramer told viewers. “I was wrong. I trusted this management team. It was misguided. The hubris here is extraordinary and I apologize.
Zuckerberg is not alone. According to Forbes, tech billionaires have lost $315 billion since last year.
On Thursday, Amazon said this Christmas season would be less cheerful than analysts had expected and that consumer spending was in “uncharted waters”, sending its stock price down 20%. The decline hit Amazon founder Jeff Bezos as low as $4.7 billion that day. Bezos had already lost nearly $60 billion in 2022, still leaving him with a net worth of around $134 billion.
A day earlier, Microsoft’s earnings report showed that reliable cloud computing earnings growth at its Azure division was slowing, dragging the company’s valuation down nearly 8%. It will hit Bill Gates, whose fortune this year shrank by nearly $30 billion to about $109 billion.
Even Tesla founder Elon Musk, the world’s richest man and now owner of Twitter, hasn’t been immune to the downturn. Shares of Tesla, the electric vehicle maker, have fallen 43.7% since the start of the year. This reduced the fortune of the would-be colonizer of Mars from $58.6 billion over the past 12 months to a still astronomical $212 billion.
But despite the week’s stock market bloodbath, 56 of the 65 tech billionaires on Forbes The magazine’s list – which includes Oracle founder Larry Ellison, Google founders Larry Page and Sergey Brin, Twitter founder Jack Dorsey and former Microsoft CEO Steve Ballmer – is still richer than there is. three years.
Earlier this year, Chuck Collins, the director of the Institute for Policy Studies think tank that runs its inequality program, estimated that America’s billionaires had seen their combined wealth increase by more than $1.7 billion. , a gain of more than 58%, during the pandemic. Recent declines have, according to Collins, reduced that figure to $1.5 billion, or 51%.
“The gains were so extraordinary over the two years of the pandemic, it was almost pornographic,” he said. “Billionaires are essentially disconnected from the real world and the real economy. Even if their wealth adjusts now, who else has had a 51% gain in assets over the past two years?”
Billionaires are not the real victims. Tech companies have come to dominate US equity markets and their decline drags down the broader market, and with it the pensions and savings of Americans who are also struggling with rising interest rates and high inflation. for 40 years.
The larger question is: how long will this fall last and who will be most affected? They are unlikely to be the aristocrats of big tech. “If wealth is going to disappear from the economy, this is the best place for it to disappear,” Collins says. “It may slow the trickle down to philanthropy, but the reality is that most billionaires give to their own foundations and donor-advised funds. But it could mean there’s less dynastic wealth, which ultimately I think is a good thing.
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