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The tech sector is bracing for economic headwinds, strong growth is giving way to slight growth, stagnation or even contraction, and the outlook is uncertain.
Take the quarterly results of Meta, the parent company of Facebook and Instagram. for the first time Turnover will be lower mentioned. Snapchat sees its losses continue to rise, on Twitter mess with it (Acquisition dispute with Tesla CEO Musk) and Netflix loses subscribers again due to increased competition And grab a lot.
The technology sector has performed well in recent years. Because of the pandemic, the world has become “online”. Working from home has become a normalcy and you no longer go out for fun, just because everything is closed during lockdowns. Growth in the tech giants cannot be stopped, with 2021 hitting a peak.
But things have since deteriorated, due in part to rising inflation and economic turmoil. Advertisers are becoming more cautious and spending less money.
Meta, Snap, Twitter, and Netflix have all grown during the pandemic, but stock prices have fallen in recent months:
Jim Teihoburning, stock market analyst from 1Asset Management believes that the stock market has overreacted in recent months. The worst numbers were taken into account and from that perspective, the quarterly numbers weren’t too bad. This brings some peace to the market.
“It’s not that all tech companies are in the same bad situation,” says Teehoburning. “You have the good and the bad. The first category includes technology companies that are profitable and don’t need outside money. The other category are fast growers that don’t make a profit and need outside money.”
These “bad” companies are even more dangerous in turbulent times. Indicates the parent company of Snapchat; There is no way to make a profit. Twitter has the same problem. And with Netflix, the question is whether it can grow much more, because so many providers have joined in.
The company is evolving in three phases, Teihoburning says. First, there’s the strong start. Then success is achieved, without making real money. Then comes, if all goes well, the third stage: dairy cow.
And in this category is the big tech. Meta, Google, Apple, Microsoft and Amazon combined represent quarterly revenue of 350 billion euros. It is so large that it can withstand a great deal of adversity.
This does not change the fact that the technology sector has been used to massive success in recent years, especially during the Corona pandemic. But this is over. “The situation is now worse than it was in the first three months of this year,” said Meta CEO Zuckerberg. His company saw a slight drop in its sales for the first time.
Brakes on the workforce
Before the quarterly earnings period, there were all kinds of reports that companies were hiring fewer employees. This is seen as a signal to investors that tech companies are taking the deteriorating conditions seriously.
For Silicon Valley, where it’s about growth, growth and more growth, that’s a big change.
For example, Google usually employs thousands of employees. The fact that the search giant has not been doing this for a while is seen as an unusual move. Apple, the world’s most valuable company on the stock exchange with $2,500 billion, also wants It is said he wants Hire fewer people and pay more attention to spending.
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