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Tech companies lost $17 billion in Q1 as equity investments take a hit


Rivian’s electric Amazon delivery truck cruises down Main Street with the Hollywood Sign in the background.


Technology sell-off 2022 acceleratedThese earnings reports highlighted challenges such as inflation, shortages of supply chain and the conflict in Ukraine over the last few weeks.

Some tech leaders have experienced a double setback as a result of the market slump. They had to deal with operating difficulties and were active investors in the long bull market that ended at the end of last year. 

The pain of mark to market accounting is here.

Amazon, Uber, AlphabetAnd ShopifyIn the first quarter, each company suffered losses totaling more than a billion dollars on equity investments. You can also find reports from Snap, Qualcomm, MicrosoftAnd OracleFor the first three months, tech company equity losses topped $17Billion.

A high-growth company can make investments that looked once like genius. lined up for blockbuster IPOsThey are producing serious red ink. Nasdaq fell 9.1% during the first quarter. This is its worst performance in nearly two years.

As of Thursday’s close, the tech-rich index was down 13% for the second quarter. Recent high-fliers have lost over half of their value within a few months.

Many terms are used by companies to explain investment markdowns. They are sometimes called non-operating expense or unrealized loss, but others refer to them as revaluation or change in fair worth. Tech companies will be reminded, for the first-time in more than a decade, that it is dangerous to invest in peers in the same industry.

Shopify and Uber suffered the most recent losses.

Uber said WednesdayOut of the $5.9 billion in quarterly loss, $5.6 million came from Southeast Asian delivery and mobility company stakes. GrabChinese ride-hailing company and autonomous vehicle company Aurora Didi.

Uber initially acquired Grab and Didi shares through the sale of its regional businesses. Uber thought the deals would be profitable as Uber’s private valuations were high. However, shares in Didi and Grab plunged after they were publicly listed in the U.S.

Buyify Thursday recordedIt suffered a loss of $1.6 billion on its investments. This is mainly due to online lenders AffirmThe company also became public in the same year.

Shopify acquired its share in Affirm via a partnershipIn July 2020, the agreement was signed. Affirm was made the sole provider of point-of sale financing for Shop Pay. Shopify also received warrants that allowed them to purchase up to 20 million Affirm shares at one penny each.

Affirm’s November high of $27.02 is more than 80 percent lower, which leaves Shopify suffering a significant loss in the fourth quarter. Shopify still has a substantial advantage over its initial investment, however Affirm is trading at $27.02.

Amazon was the tech firm that suffered the most from the investments it made in the fourth quarter. The e-retailer disclosedLast week, it suffered a loss of $7.6 billion on its stakes in an electric vehicle company Rivian.

Rivian’s shares fell nearly half in three months after 2022 began. a splashy debutThe November market report. Rivian was purchased by Amazon as part of its strategic partnership. Rivian aims to manufacture 100,000 vehicles per year.

Rivian R1T pickup truck, made by Rivian, during its IPO in New York outside of the Nasdaq MarketSite, New York on Wednesday, November 10, 2021.

Bing Guan | Bloomberg | Getty Images

Rivian’s downturn coincided with an increase in tech stock turnover at the close of the last year. This was due to rising inflation and higher interest rates. This trend was accelerated by the February invasion of Ukraine by Russia. Oil prices soared even more and the Federal Reserve started raising its rates.

Last week, Alphabet postedIt suffered a $1.07 Billion loss in investments because of “market volatility”. Google is the parent company of investment vehicles. UiPath, Freshworks, LyftAnd DuolingoThe sluggishness of the remained between 18% to 59% during the quarter.

Qualcomm reportedA $240 million loss in marketable securities was “primarily due to the increase in fair value of some of our QSI equity investments in companies at early or growth stages.” QSI (or Qualcomm Strategic Investments) invests money in start-ups that specialize in digital health and networking.

Qualcomm stated that fair value of investments has been subject to volatility and will continue to be so.

Snap reported in late April that Snap recorded a $92 Million “unrealized Loss on Investment that was made public in H2 202021.”

Investors still need to be informed about the largest markdowns in the first quarter meltdown. SalesforceThe venture arm of. among the most activeBackers for pre-IPO companies in the late.

Salesforce reported investment gains totaling $3.38B in the last two fiscal years. This month Salesforce will report its first quarter results. Investors will carefully examine the data to find out if the cloud-software vendor is exiting at the right time, or if it is still in business.

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