The valuation is primarily founded on expected future earnings. That is, if people predict that a company will earn lots of money in the future, then its current value right now goes up because people want a share of those future earnings.

Importantly, future money is also a gamble in some ways, because it's uncertain. If a company has a 50% chance of giving $200, but a 50% chance of giving $50 next year, then it's worth an average of $125 next year (risk averse people might discount it further because they don't like risky gambles).

So, if you think a company has the above 50-50 shot, then you would value the company at $125, and buy stock for that much. If you knew for sure it would grow, you'd buy it at $200. If you knew for sure it would shrink, you'd only buy at $50. But if you're unsure then $125 is a reasonable price. If, after buying, more information comes out that it's actually going to be unlucky and be $50, then suddenly the value of your stock will drop from $125 to $50. What happened, where did the value go?

From a certain perspective, it was never there to begin with. In some sense the company was always destined to be worth $50 next year and your valuation of $125 was incorrect based on imperfect information. It was always truly worth $50 and you simply overestimated it.

From this perspective, the investor lost $75, which was gained by whoever sold them the overpriced stock, because they sold stock which was truly worth $50 for the price of $125, and got out of the market before the truth was discovered.

From another perspective, maybe the company truly has a real possibility of being worth $50 or $200, and even though your information is imperfect, it's not random, it's based on decisions made by the company and the economy overall. There is a possible future in which it is worth $200 next year because it genuinely produces and sells $200 worth of goods, and another future in which it makes poor decisions and only produces and sells $50 worth of goods. If the government makes some sort of regulation that cripples the business, or the CEO botches a decision, or some competitor springs up and outcompetes them, then they lose the lucrative future and gain the poor future. From this perspective then, potential value is being destroyed in the future. That is, they had $200 worth of opportunity and they lost it. Value that people thought would be created was not. If somebody creates a virus that will inevitably kill all the corn plants five months from now, the valuation of farms will plummet in anticipation of the lost value that was supposed to be created but will instead be destroyed, despite the fact that it hasn't physically been destroyed yet.

Tech is a growing industry. People expect it to make even more money in the future than it is now, and anything that changes those expectations will change current valuations immediately, because people are planning for the future and pricing it into their investments ahead of time. Investors lost $400 billion of potential value because we used to think the stuff they had was going to be super valuable and now we think it will be only somewhat valuable.