largeLast week was a bad time for being a tech billionaire. As the pandemic pushed the world online, the founders of Facebook, Google and Microsoft made fortunes known as “pornography” and cemented their status as one of the wealthiest groups of all time. Well, the “good times” are over. kinda.
The world’s largest tech company reported its latest earnings last week, and for the most part, it was bad news. Meta (formerly Facebook), Alphabet (formerly Google) and Microsoft lost billions of dollars in value as investors began to worry that the tech giants’ good days were over. The five biggest tech stocks fell a combined $950bn (£820m) at their lows as investors pulled out. This slide also struck the fate of their creators.
Facebook co-founder Mark Zuckerberg’s fortune plummeted by $11 billion on Wednesday after Meta Platforms posted a second straight quarter of disappointing earnings. The company’s stock price fell by a fifth — a sharp devaluation that has reduced Zuckerberg’s overall wealth by more than $87 billion this year. Those numbers may just be a shift in arithmetic — Zuckerberg, 38, is still worth about $38 billion, according to Bloomberg — but that compares to the $142 billion he can count on in September 2021 , which is an astonishing drop. Nearly all of his wealth is tied up in rising Meta shares; he holds more than 350 million shares. Zuckerberg was No. 28 on the Bloomberg rankings as of Thursday, down 25 spots from his previous No. 3 spot.
Meta is down 71% this year for a number of reasons, including Apple’s enforcement of ad tracking controls, weakness in digital ad spending, TikTok’s challenge to Facebook-owned Instagram, and Meta’s multibillion-dollar investment in the Metaverse — despite a less-than-warm reception, Even from its own employees, it’s still throwing money at virtual worlds.
The investment troubled investors. Zuckerberg has said he expects the project to lose a “significant amount” of money over the next three to five years. On Wednesday, he asked for patience.
“I think we’re going to address these issues at different times,” Zuckerberg said. “I appreciate the patience, and I think those who are patient and invest with us will eventually pay off.” Wall Street seems very impatient.
CNBC TV host Jim Cramer, who has been a booster for Meta, looked almost in tears after the latest results. “I made a mistake here,” Cramer told the audience. “I was wrong. I trusted this management team. That was unwise. The arrogance here is extraordinary and I apologize.”
Zuckerberg is not alone. Tech billionaires have collectively lost $315 billion since last year, according to Forbes.
Amazon fell 20% on Thursday after it reported that the Christmas season will not be as pleasant as analysts had expected, with consumer spending in “uncharted waters.” Shares in Amazon founder Jeff Bezos fell as much as $4.7 billion on the day. Bezos has already lost nearly $60 billion in 2022, but his net worth is still around $134 billion.
A day earlier, Microsoft’s earnings report showed that growth in solid cloud computing earnings from its Azure unit was slowing, sending the company’s valuation down nearly 8%. That will hit Bill Gates, whose fortune has shrunk by nearly $30 billion this year to about $109 billion.
Even Tesla founder Elon Musk, the richest man in the world and now the owner of Twitter, has not been spared the economic downturn. Shares of electric car maker Tesla have fallen 43.7% so far this year. That has shaved $58.6 billion off the would-be Martian colonist’s wealth over the past 12 months, still an astronomical $212 billion.
But despite the stock market bloodshed this week, 56 of the 65 tech billionaires 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 Shi Steve Ballmer – still richer than he was three years ago.
Earlier this year, Chuck Collins, director of the Institute for Policy Studies think tank, estimated that the combined wealth of U.S. billionaires increased by more than $1.7 trillion during the pandemic, an increase of more than 58%. Collins now says the recent decline has brought it down to $1.5 billion, or 51%.
“In the two years of the pandemic, the gains have been so extraordinary, it’s almost pornographic,” he said. “Billionaires are basically disconnected from the real world and the real economy. Even if their wealth is adjusting now, the last two years have Whose assets grew by 51%?”
Billionaires are not the real victims. Tech companies have come to dominate the U.S. stock market, and their declines are dragging down the broader market, and with it the pensions and savings of Americans, who are also grappling with rising interest rates and 40 years of high inflation.
The bigger question is: How long will this fall be and who will be hurt the most? Unlikely to be the aristocracy of big tech. “If wealth is going to disappear from the economy, this is the best place for it to disappear,” Collins said. “It may slow down the trickle of philanthropy, but the reality is that most billionaires are donating to their own foundations and those suggested by their donors. But it could mean less dynasty wealth, which I think ultimately is a good thing.”