I know well that these days there is nothing but talk of Elon Musk and Twitter. Musk fires this, Musk enters the social media office with the sink, Musk wants to readmit Trump: Musk, Musk, Musk.
You're all losing sight of the real Big Tech news: the giant electronics companies that have fueled the tech business for years won't go away, but their superstar days seem to be drawing to a close.
And the Wall Street bigwigs who brought them to the altar are now giving up. It's a downsizing, period. Maybe not in goals, but certainly in "posture": these companies (and before that their employees) must learn to live with less.
Many clues prove it
Every time Big Tech stocks go down there is someone who shouts for their death, but at least here we have been talking about it for a long time. And anyway, tell me what we should talk about when Alphabet, Meta and Amazon lose 400 billion in value in just one week.
The reasons? On closer inspection, all different. But all these reasons have the same underlying problem: Big Tech are now mature, staid companies. They no longer impress Wall Street, with crazy growth in their core businesses, and none of them seem to have giant new businesses on the way. Alphabet, for example, experienced revenue growth of just 6%, the weakest quarter in a decade.
In practice, Big Tech have become institutionalized. Just like other big companies, take Coca-Cola: no one expects Coca-Cola sales to skyrocket anymore.
And the metaverse?
Big Tech heavyweights, of course, try to convince investors otherwise. You know the story of the metaverse of Meta or of the Apple AR viewers, Or Hololens from Microsoft? Big maneuvers that fear the next, big revolution in information technology that will generate a lot of economic activity and so on.
Of course. I'm not saying no. But these things are very expensive and very speculative. At the moment, the REAL activities of Big Tech are far from any “revolution”. Apple and Amazon try to launch their advertising businesses. Zuckerberg wants to “Tiktokize” Facebook and Instagram. Alphabet is trying to relaunch YouTube, an "innovative" product that is almost 20 years old.
That's all? People are wondering what Apple's big hit will be after iPhone, and rumors aside on cars e viewers, he sees nothing.
As long as the big wave resisted (Since the 2008 crisis, the US government has lowered loan rates to almost zero and kept them there until recently) he let the boat go. If the money is essentially free, investors look for more speculative bets, which increase the value of the companies they are betting on, which convinces more investors to pile into the same thing and repeat.
Now, lo and behold, the US financial "lifebelt" has failed, and Big Tech stocks have started to plummet.
Big Tech: "they don't die, but they live badly"
Big tech companies (that are really big and really profitable) aren't going away, but their valuations are going down. A rough way to measure investor enthusiasm is through the ratio that compares a company's stock price to the value of its earnings. Meta, for example, had a price-to-earnings ratio of 32,75 at the end of 2020; it is now down to 9.434. Alphabet dropped from 34.32 to 19.14
Among all, however, the most important sign of "adulthood" and the end of hot spirits is another: almost all the men who started and managed large technology companies have given way to professional managers. It's more fun to do other things.
Big Tech becomes “Middle Tech”, but that's not a bad thing
This doesn't mean this crash is necessarily bad. Take Facebook, which hired more than 19.000 people in the last year (a 28% headcount increase). It will now hold the brakes for at least another 15 months: very few hires and no turnover with those who leave, cut deadwood.
Do you know what that means? (Now you will call me an incurable optimist) It means that all the future, lost Facebook employees will join the ranks of other companies.
Maybe more innovative startups.
In recent years it has been said that Big Tech companies had grown so large that it was impossible to do something new without their permission. They are still big and powerful now, but maybe not that much for the kind of person who wants to do a new thing.
Make way for the future!
