“Is this a tech bust? It remains to be seen.”

Tech shares are in for a bumpy ride.

Jeff Bezos knew this day was coming. Back in April the Amazon boss warned of an impending market slowdown, tweeting that the epic tech boom experienced during the last two years could not last for ever.

“Most people dramatically underestimate the remarkableness of this bull run,” he said. “Such things are unstoppable … until they aren’t. Markets teach,” Bezos added. “The lessons can be painful.”

Apple is no longer the most valuable company in the world, after losing $200bn in market value this week. It joins a number of other tech companies in a slump that began in late 2021, and brought the Nasdaq Composite down more than 13% in April- a more than 30% drop from record highs the previous year.

Meta lost a record $230bn in market value in February after a disappointing earnings report in which it revealed its Facebook platform had experienced its first ever user decline. Amazon reported its first loss since 2015 in its most recent earnings report last month. Alphabet revenue fell short in its first-quarter report. Smaller firms are also struggling, with pandemic success story Peloton seeing shares plunge 20% this week as demand for indoor exercise equipment fell.

Twitter announced in an internal memo on Thursday it was freezing new hires, and Meta did the same last week, citing an expense guidance given in its recent earnings report. Amazon said in a recent earnings call its warehouses were “overstaffed” and while it is not considering layoffs it is “working to remedy that”.

When Covid-19 hit in early 2020, companies such as Peloton, Zoom and Netflix boomed as offices shuttered and people spent more time at home. Zoom saw its value explode more than 500% in one year, but in recent days has seen stock fall nearly to pre-pandemic lows. Netflix, which added more than 36 million subscribers during the first year of the pandemic, has lost more than half of its value since reporting disappointing results on 19 April.

Overall market sentiments are reversing from the very bullish sentiment we’ve seen during the pandemic, during which the companies saw a huge boom in demand. In the post-pandemic world, that demand is now coming to more normalized level. It’s not as if these companies are failing - it is that the explosive growth seen over the last two years is not sustainable.

Guardian.