How can a publicly traded company lose billions of dollars in one day and what happens with that money?

Question

E.g., Google lost $100b after its AI made a factual error in a demo.

Or when Musk lost $200b.

What happens with that loss? Do they need to do layoffs specifically because of that? Close massive projects? How can a company continue to even exist after that kind of financial loss?

Thanks!

In: 5

Answer 1

Eli5 answer. It doesn’t lose money it loses value. Your new PS5 is worth 500 today because if you try to sell it some will probably pay that much. But if you smash it to bits with a hammer you won’t be able to find someone willing to pay that much anymore. It’s value has gone down. No money actually went anywhere.