LLast week was a bad time to be a tech billionaire. As the pandemic has turned the world online, the founders of Facebook, Google and Microsoft have amassed fortunes described as “pornographic”, cementing their position as one of the wealthiest groups to ever walk the planet. Well, the “good times” are behind us. Sorting.
The world’s biggest tech companies reported their latest earnings last week, and for many, the news was bad. Meta (formerly Facebook), Alphabet (formerly Google) and Microsoft have seen billions wiped off their assets as investors worry that the tech titans’ best days are behind them. The five biggest tech stocks fell by $950bn (£820m) at their lowest point as investors scrambled for the exits. The slide also affected the happiness of their creators.
Facebook founder Mark Zuckerberg’s fortune fell by $11 billion on Wednesday after Meta Platforms reported disappointing second-quarter earnings. The company’s shares fell by more than a fifth – a sharp decline that brought Zuckerberg’s net worth to more than $87 billion this year. The numbers may not be much more than arithmetical manipulations — Zuckerberg, 38, is still worth about $38 billion, according to Bloomberg — but it’s a staggering drop from the $142 billion he could count on in September 2021. Almost all of his wealth is tied up. High on Meta stock; It has more than 350 million shares. As of Thursday, Zuckerberg was ranked 28th on Bloomberg’s list, down 25 spots from his previous position of third.
The 71% drop in Meta’s value this year is due to many things, including ad controls imposed by Apple, softening of digital ad spending, TikTok’s challenge to Facebook-owned Instagram, and Meta’s billions in investments in the metaverse. The virtual world is throwing money away, despite not being warmly received even by its own employees.
This investment has investors worried. Zuckerberg said he expects the project to lose “significant” money over the next three to five years. On Wednesday, he pleaded for patience.
“I think we’re going to solve each of these problems at different times,” Zuckerberg said. “I appreciate patience and I think those who are patient and invest with us will be rewarded.” Wall Street seems to have run out of patience.
CNBC’s Jim Cramer, who supported Meta, broke down in tears after the final results were announced. “I made a mistake here,” Cramer told the audience. “I was wrong. I trusted this management team. It wasn’t right. The arrogance here is extraordinary and I apologize.”
Zuckerberg is not alone. According to Forbes, tech billionaires have lost $315 billion since last year.
Amazon said on Thursday that this Christmas season would be less merry than analysts expected and that consumer spending was in “uncharted waters,” sending its share price down 20%. The drop brought Amazon founder Jeff Bezos to $4.7 billion in one day. Bezos lost nearly $60 billion in 2022, still with a net worth of about $134 billion.
A day earlier, Microsoft’s earnings report showed that reliable cloud computing revenue growth at its Azure unit had slowed, causing the company’s stock to fall by about 8%. That goes to Bill Gates, whose fortune has fallen by $30 billion this year to about $109 billion.
Even Elon Musk, the founder of Tesla, the richest man in the world and now the owner of Twitter, did not survive the downturn. Shares of electric vehicle maker Tesla are down 43.7% year to date. That reduced the Mars colonizer’s fortune by $58.6 billion over the past 12 months to a still-astronomical $212 billion.
But despite the week’s stock market carnage, 56 of the 65 tech billionaires are working Forbes With Oracle founder Larry Ellison, Google co-founders Larry Page and Sergey Brin, Twitter co-founder Jack Dorsey and former Microsoft CEO Steve Ballmer, the magazine’s list is still richer than it was three years ago.
Earlier this year, Chuck Collins, director of the Policy Research Institute think tank’s program on inequality, saw the combined wealth of U.S. billionaires increase by more than $1.7 trillion, a more than 58 percent increase during the pandemic. The latest decline, Collins said, cut that to $1.5 billion, or 51 percent.
“The gains in two years of the pandemic were so extraordinary, it was almost pornographic,” he said. “Billionaires are disconnected from the real world and the real economy. Even if their wealth is declining, who has seen their assets grow by 51% in the last two years?’
The real victims are not billionaires. Tech companies have come to dominate U.S. stock markets, and their declines have dented the broader market and with it the pensions and savings of Americans struggling with rising interest rates and the highest levels of inflation in 40 years.
The biggest question is how long will this fall last and who will suffer the most? Big tech is unlikely to have an aristocracy. “If wealth is going to disappear from the economy, this is the best place for it to disappear,” says Collins. “This may slow down charitable giving, but the reality is that most billionaires give to their own foundations and donor-advised funds. But it might mean less dynastic wealth, which I think is a good thing.”