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Amazon first company to experience a market cap loss of $1 trillion

Amazon experience market cap loss of $1 trillion: Fear of a recession, increasing inflation, tightening monetary policies, and a slowdown in earnings reports led to a historic selloff in the shares, making Jeff Bezos’ business Amazon the first publicly traded company in history to lose a trillion dollars in market value.

Amazon experience market cap loss of $1 trillion: Key Points

  • The market capitalization of the e-commerce and cloud corporation has dropped to roughly $879 billion from a record close of $1.88 trillion in July 2021 as a result of falling shares in the months of October and November.
  • The stock prices of the Big Five American Technology Companies—Intel, Microsoft, Alphabet (owner of Google), Meta (formerly Facebook), and Amazon—are plunging as their growth prospects dim in a country where recession fears are pervasive.
  • The market capitalization of the top five US technology businesses by revenue has decreased this year by close to $4 trillion.
  • As consumers cut back on their purchasing in the face of economic uncertainty, Amazon forecasted the slowest revenue increase for a holiday quarter in the company’s history in October 2022. That caused its market value to fall for the first time below $1 trillion.

Market Capitalization or M-cap: About

Market capitalization is calculated by multiplying the entire number of a company’s freely tradable shares by the share’s current market value.

What is Market Capitalization?

The total worth of all a company’s stock shares is referred to as market cap, also known as market capitalization. It is computed by dividing the stock’s price by the total number of shares that are currently outstanding. A corporation with 20 million shares trading at $50 each, for instance, would have a $1 billion market valuation.

Why is the idea of market capitalization so crucial?

Investors can use it to determine how big a firm is in comparison to another. Because it reflects the price investors are prepared to pay for a company’s stock, market capitalization assesses a company’s value on the open market as well as the market’s opinion of its future prospects.

Market capitalization types

Companies in India are divided into three market capitalization categories: Large Cap, Mid-Cap, and Small Cap. Here, “cap” stands for capitalization.

Large Cap: Companies classified as large-cap typically have a market value of $10 billion or more. Large-cap companies frequently have a track record of paying dividends on time, stable growth, and a reputation for providing high-quality products and services. They are frequently dominating players in well-established industries, and a national consumer audience may be familiar with their brand names. Investments in large-cap stocks may be more conservative than those in small- or mid-cap firms as a result, thus posing lower risk for less aggressive growth potential.

Mid-Cap: Publicly traded businesses with a market value of between Rs 5000 and Rs 20,000 crores. Businesses with a market value between $2 billion and $10 billion are often classified as mid-cap enterprises. These are typically well-established businesses in fields that are experiencing or are predicted to see fast growth. These mid-sized businesses can be working to boost their overall competitiveness and market share. It’s possible that this phase of development will determine if a company ever realises its full potential. On the risk/return continuum, mid-cap stocks often sit between large companies and small caps. Mid-caps may have lower risk than small-caps and greater growth potential than large-caps.

Small Cap: Publicly traded businesses with a market cap of under Rs 5,000 crores. Companies classified as small-cap typically have a market value between $300 million and $2 billion. These are typically young businesses that cater to niche consumers or developing industries. The most aggressive and dangerous of the three types is small caps. Small businesses may be possibly more susceptible to a business or economic slump due to their relatively limited resources. They might also be at risk from the fierce competition and unpredictability that characterise new, developing markets. On the other hand, long-term investors who can handle erratic short-term stock price swings may find that small-cap stocks have tremendous growth potential.

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