Technology companies lost more than $ 17 billion in equity investment in the first quarter
An Amazon electric van drives down the street from Rivian with a Hollywood sign in the background.
Amazon:
2022 tech sales have surged in recent weeks as first-quarter earnings reports highlight issues like inflation, supply chain shortages and the war in Ukraine.
For some technology leaders, the market downturn has dealt a double whammy. In addition to battling their operating winds, they were among the more active investors in the bull market than other companies that went bankrupt late last year.
Welcome to the pain of current price accounting.
Amazon , Uber , Alphabet and Shopify recorded billions more in losses in the first quarter. What's more, Snap , Qualcomm , Microsoft , and Oracle have reported overall total losses of technology stocks in the first three months of the year in excess of $17 billion.
An investment that once seemed like genius, especially when fast-growing companies lined up for successful IPOs , is now making some serious red paint. The Nasdaq fell 9.1% in the first quarter, its worst period in two years.
The second quarter looks worse as the technology index fell 13% by Thursday's close. Recently, high-altitude flights have lost more than half their value in just a few months.
Companies use a variety of colorful terms to describe their investment brands. Some refer to these as non-operating expenses or unrealized losses, while others use terms such as revaluation to fair value. Regardless of the language they use, they are reminding tech companies for the first time in more than a decade that investing in their industry partners is a risky business.
The latest leaks come from Uber and Shopify, which reported first-quarter results for the week.
Uber said on Wednesday that $5.6 billion of its $5.9 billion quarterly loss came from Southeast Asian autonomous transportation company Aurora and China's Didi .
Initially, Uber bought its shares in Grab and Didi, selling its regional operations to the respective companies. The deals looked lucrative for Uber as private ratings rose, but shares in Didi and Grab tumbled after listing in the US last year.
On Thursday, Shopify posted a $1.6 billion loss on its investment. Much of this comes from Affirm Online Lender, also released last year.
Shopify acquired its shares in Affirm as part of a partnership in July 2020. Under the agreement, Affirm became the sole financial provider for Shop Pay, Shopify's payment service outlets, and Shopify was guaranteed to buy up to 20.3 million shares. in Affirm one cent each.
It claims to be down more than 80% from its November record, causing Shopify to suffer huge losses for the quarter. But when Affirm sells for $27.02, Shopify is still well above its original investment.
Amazon was the tech company that suffered the most from its quarterly investment. Last week, the electronics retailer reported that it lost $7.6 billion due to shares in Rivian , the electric car maker.
Rivian shares have fallen nearly 50% in the first three months of 2022 following a November boom in public markets. Amazon has invested more than $1.3 billion in Rivian as part of a strategic partnership with EV that aims to produce 100,000 vehicles by 2030.
The Rivian R1T electric truck during the company's IPO outside the Nasdaq MarketSite in New York on Wednesday, November 10, 2021.
Bing Guan |: Bloomberg |: Getty images:
Rivian's fall coincided with broader turnover in tech stocks late last year, fueled by rising inflation and the possibility of higher interest rates. That trend accelerated this year when Russia invaded Ukraine in February, oil prices rose even more and the Federal Reserve began raising interest rates.
Alphabet lost $1.07 billion in investments last week due to “market volatility.” Shares in Google's parent company UiPath , Freshworks , Lyft and Duolingo fell 18% to -59% in the first quarter.
Qualcomm posted a loss of $240 million on the securities, "principally due to changes in the fair value of investments in certain QSI market capitalizations in emerging companies or at the start-up stage." QSI or Qualcomm Strategic Investments invests in startups in artificial intelligence, digital health, networking and more.
“The real value of these investments is that they may continue to be subject to increasing volatility,” Qualcomm said.
At the same time, at the end of April, Snap said it recorded $92 million in “unrealized investment losses issued in the second half of 2021.”
Despite the biggest decline since the first quarter, investors have not yet heard of Salesforce , whose risk management division has been one of the company's most vocal supporters in recent times before the IPO .
Over the past two fiscal years, Salesforce has reported $3.38 billion in cumulative investment income. Salesforce is expected to release first-quarter results later this month, and investors will be watching closely to see if the cloud service provider exits on time or still holds the stock market.
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