The Tech Sell-Off is Set to be Worse in Q2...
Tech companies have lost nearly $17 Billion on equity investments in Q1
2022 has been the absolute worst nightmare for the tech sector. In the past couple of weeks, the sell-off of tech stocks accelerated with Q1 earnings calls detailing the challenges of inflation, supply chain disruptions, and the war in Ukraine.
In addition to losing large amounts of capital due to their own company downfalls, these tech companies in reference were some of the most active investors of other companies most likely due to a fake bull run that ultimately hit a wall - a hard wall.
Billion dollar losses were a common occurrence for equity investments in Q1. If you add Amazon, Uber, Google, Shopify, Qualcomm, Snapchat, Oracle, and Microsoft, the total losses amount to $17 Billion for Q1 alone. Investments that were once considered genius now produced serious risks. The companies placing the investments had their printers running out of red ink.
Just as these companies thought the nightmare was over, Q2 is expected to be worse as the NASDAQ (the heaviest index in relation to the tech sector within) has lost 13% as of close yesterday.
Uber said Wednesday, during its earnings, that it lost $5.9 Billion in Q1. $5.6 Billion of that came from their investment into the delivery company Grab, the vehicle company Aurora, and Didi, a Chinese ride-hailing giant.
The next victim was Shopify, who during Thursday’s earnings call reported a $1.6 Billion loss on their investments to online lender Affirm.
Affirm itself is down nearly 80%+ from ATH in November. Even as Affirm is trading at $27.02, Shopify is still a winner in the deal.
Amazon took a massive loss as they reported a loss of $7.6 Billion on investment into EV company Rivian. Rivian is down upwards of 50% after a shaky debut.
Google reported a $1.07 Billion loss on investments due to a broad “market volatility.” The investments include shares of UiPath, Freshworks, Lyft, and Duolingo which all tumbled between 18% and 59% in Q1.
$240 Million of losses was reported by Qualcomm primarily driven by “the change in fair value of certain QSI marketable equity investments in early or growth stage companies. The fair values of these investments have been and may continue to be subject to increased volatility.”
Snapchat reported in late April that they have had a $92 Million unrealized loss on investment.
All eyes are on Salesforce as they are yet to report earnings and have huge activity in backing pre-IPO companies. In the past two years, Salesforce has disclosed combined investment gains of $3.38 Billion.