Thursday, March 30

A hole of 4 trillion dollars only among ten companies: the technological ones before a horrible 2022

2020 was the year of uncertainty caused by the pandemic, although the scare in the markets for any company that did not depend on tourism and mobility was short-lived. Especially for technology. 2021 was the year of recovery and optimism about vaccines. Few could think then that 2022 was going to be terrifying for the big technology companies, dominators and symbol of the previous decade. Only between ten of them have left four billion dollars. If with b.

With b pothole, bump and bestial. From the 20% that Apple or Microsoft have left to the 60 and 70% that PayPal, Spotify or Netflix have lost. Other technology companies outside this list have also left significant amounts, in the case of Snap (70% since January 1) or (72%).

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The case of one of the last mentioned, Snap, is especially serious due to its two large vertical falls. The first, in October 2021, cut off 30% of its value overnight. Literally. The second, a few days ago, took 43% ahead.

Ukraine, the rise in interest rates, the global economic slowdown…

One of the main factors that have led to this situation, beyond eventualities such as the drop in Netflix subscribers or the difficulties in the digital advertising market for the platforms that depend on it, is the increase in interest rates announced by the US Federal Reserve, a measure aimed at containing the strong inflation unleashed after the uncontrolled printing of dollars since the pandemic began.

Along with the prospect of an increase in interest rates is the uncertainty when it comes to investing due to the invasion of Ukraine by Russia or caution in the face of a slowdown in the global economy.

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I've spent $10,000 on my SimRacing.  I still plan to spend more

An advertising industry mantra says that spending on marketing is often one of the first faucets to be turned off in companies when the economy is bad. Something that contextualizes the worst performance of companies where these investments are important (Alphabet, Amazon, Meta) compared to others where it is secondary or residual (Apple, Microsoft).

Technological companies lived their golden decade in the 1910s, with sustained growth that led several to comfortably exceed market capitalizations of over a trillion dollars, reaching close to three trillion in the case of Apple, which has been almost three decades without knowing what a crisis is, since the previous two were compensated in an almost miraculous way by the simultaneous arrival of two products that changed the history of the company, such as the iPod and the iPhone.

We are at the beginning of 2022 and the perfect storm has been created between falling cryptocurrencies (although in cases like Bitcoin it is still well above its highs from just a couple of years ago), venture capital freezing its investments, startups stopping hiring or resorting to firings, and the aforementioned NASDAQ outlook. Time will tell if this hostile environment is sustained over time or if the situation is reversed sooner rather than later. for now pessimism prevails.

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