It’s doom times in tech
The five biggest technology giants in the U.S. have collectively lost more than $2 trillion of stock market value this year. Across big and small companies, there are regular announcements of hiring slowdowns or layoffs, including at Facebook, Uber, Robinhood and others ...
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I'm curious why people think its doom time for the larger companies when they command such large market shares as it is and their profitability is a greater level then almost any sector in history.
Do you actually forsee techs integration with society going down anytime soon? Our reliance on these technologies in our day to day life?
If no, then you're just allowing stock valuations that were inflated by monetary policy to cloud your thinking about what's actually happening. The S&P or NASDAQ might tell you were in a recession, but how relevant is that when most of these companies gained over 100% alone in 2021? How about the fact that most of these companies have expanded their work forces significantly in the last 2 years and that engineering talent is still impossible to find?
A more realistic way to view this is precautionary times where valuations will be more grounded but the underlying tech continues to grow and maintain a commanding market share.
The said profitability is speculative for some key players, for example the likes of Uber in the gig economy space still struggle to identify a healthy cost structure to build on, whereas their marketing budgets are through the roof.
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Overvaluation is not doom. Megacap will still make more money than any of us, or any other companies (unless you have monopoly or in energy).
Also, a lot of these companies shouldn't even survive. Doordash as an example, dotcom period there were at least hundreds of the same stuff. They never made money, just used investor's money to buy traffic and died. Real tech will survive.
I honestly dont think tech is any different to any other industry - if your business offers true value to some real customers who are willing to pay for that value, happy days!
As long as there is still pain to be solved which software can help with, startups will be fine
I think "doom" is an exaggeration. This is the standard tech cycle. It has happened before and will happen again. Apple & Microsoft are still worth more than $2 Trillion. Google & Amazon are still trillion dollar companies. Hardly doom.
BTW, we are probably still early in the down cycle.
I don't know enough about the complex dynamics at play but it seems like this might be a longer-term change than many expected it to be. We'll see!
"And because there has been so much hype, growth and cash in technology since 2020, there might be a bunch of companies that aren’t worth anywhere close to what they were worth a year or two ago, and others were shaky to begin with and might not withstand a contraction." ...
Pretty wild times.
The tech industry has been surging since the end of the recession in 2010. Perhaps it's more like a reality check that's been a long time coming.
Curious if IHers see this big downturn as a blip or will it permanently damage the tech industry?