Tech's reality check: How the industry lost $7.4 trillion in one year

Submitted by Fatherthinger t3_z619s2 in wallstreetbets

It seems like an eternity ago, but it's just been a year.

At this time in 2021, the Nasdaq Composite

had just peaked, doubling since the early days of the pandemic. Rivian's

blockbuster IPO was the latest in a record year for new issues. Hiring was booming and tech employees were frolicking in the high value of their stock options.

Twelve months later, the landscape is markedly different.

Not one of the 15 most valuable U.S. tech companies has generated positive returns in 2022. Microsoft

has shed roughly $700 billion in market cap. Meta's

market cap has contracted by over 70% from its highs, wiping out over $600 billion in value this year.

In total, investors have lost roughly $7.4 trillion, based on the 12-month drop in the Nasdaq.

Interest rate hikes have choked off access to easy capital, and soaring inflation has made all those companies promising future profit a lot less valuable today. Cloud stocks have cratered alongside crypto.

There's plenty of pain to go around. Companies across the industry are cutting costs, freezing new hires, and laying off staff. Employees who joined those hyped pre-IPO companies and took much of their compensation in the form of stock options are now deep underwater and can only hope for a future rebound.

IPOs this year slowed to a trickle after banner years in 2020 and 2021, when companies pushed through the pandemic and took advantage of an emerging world of remote work and play and an economy flush with government-backed funds. Private market darlings that raised billions in public offerings, swelling the coffers of investment banks and venture firms, saw their valuations marked down. And then down some more.

Rivian has fallen more than 80% from its peak after reaching a stratospheric market cap of over $150 billion. The Renaissance IPO ETF, a basket of newly listed U.S. companies, is down 57% over the past year.

Read more: https://www.reddit.com/user/Fatherthinger/comments/z60q5y/techs_reality_check_how_the_industry_lost_74/

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qwertyWarrior77 t1_ixyvdpe wrote

“The story of how market cap is a fake number and the term on paper doesn’t mean anything”

57

neothedreamer t1_iy2cnau wrote

This. Saying a bunch of money has been lost from an artificial high end of last year is ridiculous.

5

That-Whereas3367 t1_iy32tql wrote

It is not ridiculous. Every major tech stock has an annual turnover rate greater than 100%, For AAPL it is over 1500%. So people are buying depreciating stock with new money. Unless the prices recover that money is lost forever [Because most tech stocks don't pay dividends.]

3

neothedreamer t1_iy5rp8r wrote

This is true, however people DCA into their retirement accounts will probably be sitting on those positions for decades so there will be ample time for normal growth in the underlying business and stock price.

The last 2.5 years were not normal in any way.

1

That-Whereas3367 t1_iy88gku wrote

Most of these tech corporations won't be around in 20 years.

Index funds 'work' because all the failures are automatically culled.

1

neothedreamer t1_iy8uddm wrote

I don't know about that AAPL IPO'ed in 1980, MSFT in 1986, AMZN 1997 all are older than 20 years and part of Top 10 in S&P.

1

Zabazooo t1_ixz723p wrote

“7.4 trillion of hocus pocus money”

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book_of_armaments t1_ixz9ii5 wrote

Money supply went way up but the amount of actual value in the economy did not. The money had to go somewhere.

20

Ok-Negotiation3683 t1_ixzhhcc wrote

This was

really interesting to

Read

thanks for

posting

19

sadlifestrife t1_ixzfnf5 wrote

"Lost" lol market cap =/= money. Stock market is propped up by inflows being greater than outflows. Until you sell, the money you have in stocks is magical funny money.

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VisualMod t1_ixyu33i wrote

>This is a great article. It's really sad to see how much the tech industry has lost in value over the past year. I'm sure there are many people who are struggling because of it.

14

No_Plane_7652 t1_ixzqzrg wrote

The world needs ditch diggers too

9

Skywalker0138 t1_iy09mjz wrote

China says what Apple can and cannot do....CCP.. if the china revolution continues. things may be quite different for APPL.....

3

axisofevilsog t1_iy22mgt wrote

In the near term maybe. Apple is shifting production to India and has been for a while. Foxxcon will be begging Timmy to come back.

2

engdeveloper t1_ixzypse wrote

Market cap means nothing.

​

I read an article of a now bankrupt 3 month old startup with 3 million in sales (50 million loss) with a market cap of 2.5 billion... now 0.

7

DadMoneyGuru t1_iy026wk wrote

If you turn the chart upside down, it looks like they all rebounded from an all time low last year.

7

Odd-Block-2998 t1_iy0muvz wrote

The truth: The real crash hasn't even started. img

6

Tom37241 t1_ixyweia wrote

Los of bag holders

5

themiracy t1_ixyxylm wrote

Apple seems to be a major sector outlier so far. It’s off a little but not to nearly the degree of some of the others.

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That-Whereas3367 t1_ixzac63 wrote

A couple of quarters of slow/negative growth and it will halve.

6

themiracy t1_ixzdlcd wrote

Yeah, I kind of wonder when the shoe will drop on that one.

6

That-Whereas3367 t1_iy33z2o wrote

There is incredible market complacency regarding AAPL and it's supposed 'invincible' balance sheet and deep moat. In reality The fundamentals are very poor. The price/Book is 46, the debt/equality is 263% and the forward p/e is 24.

3

rRawkus t1_iy19aes wrote

It's a bag I don't mind holding long run.

2

rRawkus t1_iy0gb6a wrote

Rivian, and likewise Tesla, are auto manufactures, not tech companies. The whole market is regarded about how these companies should be valued.

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VerticalRadius t1_iy1msl2 wrote

Feels like Tesla hardly sells any cars for how valued the stock is. I think they're more of a battery company as they do sell home battery systems.

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rRawkus t1_iy1p4qk wrote

Right. Nothing innovative to see here. the iPhone of cars, so when the battery dies you get a new one. Planned obsolescence. I believe GM first did this, or at least admitted to doing it.

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VerticalRadius t1_iy1uuoq wrote

I have no idea what you're talking about and I'm pretty sure you don't either

1

TheCapitalKing t1_iy1p5ef wrote

Same for Uber and Lyft. They’re shit tier taxi companies that have and will never be profitable

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Mintleaf007 t1_iy2fpvo wrote

rivian is nothing. tesla is a tech stock which is why they were silicon valley.

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sqgeafvfasvefvfevfsa t1_iy0zl8b wrote

According to who? Literally anyone working in tech would consider them tech companies

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rRawkus t1_iy159a3 wrote

I work in tech. They are not tech companies.

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sqgeafvfasvefvfevfsa t1_iy1naw6 wrote

Lol, you must be an idiot then and not a good programmer. Obviously all the data processing Tesla does for self driving is tech, and at the forefront of tech in general. I don’t even like Tesla, but saying it’s not a tech company doesn’t make any sense when they invented so much for ai

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rRawkus t1_iy1qu0r wrote

I'll met you in the middle, they build batteries with a computer attached, that they then manufacture in a car plant. Also, they sell them as cars to people, that buy them for transportation. The tech that goes into these cars is no better then what all the other auto manufacturers have already figured out. There is no competitive moat anymore for Tesla, or other EV startups.

0

terrybmw335 t1_ixzli90 wrote

You're saying it's time to buy?

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dj_kaleb t1_ixz3tay wrote

RIVN is so worthless

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Waddayanow t1_ixzmv64 wrote

How? "Stocks only go up", that's how.

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-Hominid- t1_iy2xfvl wrote

It was never real money to begin with.

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VisualMod t1_ixyu2nd wrote

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^^WSB ^^Stats ^^Discord ^^BanBets ^^VoteBot ^^FAQ ^^Leaderboard ^^- ^Keep_VM_Alive >TL;DR: The tech industry has lost $7.4 trillion in market value over the past year, as interest rate hikes and inflation have taken their toll. IPOs have slowed to a trickle and companies are cutting costs, freezing new hires, and laying off staff.

1

HondaDAD24 t1_iy16a44 wrote

Lmfao I remember the “ RIVN to $250!!!” Crowd 😂

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yummi_1 t1_iy1i82u wrote

Forward p/e seems to always end up being the talking point when things turn. Many of these darling companies still trade a huge forward P/E.

0

Simple-Account-2490 t1_ixz260l wrote

Boomers 401ks got wrecked because they were heavy in tech and there's no way that's going to recover in time for them to cash out before theyre dead. Does that mean these fuckers got to sell their houses? Housing crisis solved.

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darkspd96 t1_ixzizrn wrote

Hahaha hahaha

News flash, boomers own their houses, could buy a 5 bedroom in a beautiful neighborhood for like $110k in the early 90s, same house now is $2.5 million

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yummi_1 t1_iy1j7co wrote

Boomers have had a few bad periods if they were invested. Totally agree the best investments they ever made were in their houses. I bought my first house in late 80's for 68,000 and now that house is worth 900,000. I'm sure it will drop from there.

Income back then was around 50k a year, I make around 4x that now. So ya, owning a home back then was the way to go.

3