Will big tech stocks bounce back or have they passed their zenith? It seems quite probable that they may have passed their peak of >25% of the S&P 500, even if there is plenty of revenue growth still to come. But now they must grow into those valuations instead of speed ahead of them.
Under the hood, it seems true that each has only one engine powering each business' cash flow, and those areas might now be slowing down significantly. Amazon's AWS, Facebook's social advertising, Google's search advertising. Perhaps only Apple seems to be better balanced between hardware and software, but it still comes against a higher valuation hurdle in a world of perhaps structurally higher interest rates and inflation.
There is some hubris here. Zuckerberg in particular seemed oblivious to the changing landscape as he charged into the metaverse. But in announcing a significant layoff this week, perhaps Zuckerberg listened to his investors, and even the economist,
"As symptoms of conglomeritis go, none is more classic than an unaccountable boss with empire-building ambitions."
Laying off 11,000 or 13% of his workforce is significant, but their headcount still remains above the total number of employees from a year ago! There may be more pain to come.
Tracking layoffs at layoff.fyi we're matching the number in the short downturn of the pandemic.
We're still a long way from a real downturn. Overall employment remains very high, plenty of tech companies have plenty of cash against the few crypto and metaverse companies who may now implode.
Still, interesting to remember how bad it can get when you throw in more geopolitics and a broader economic collapse as we had in 2001.
Throwback Thursday: Remembering the Last Big Tech Layoff Bloodbath, the Dot-Com Bust of 2000-2001
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