Big Tech is bracing for an economic recession and an uncertain future. That, in turn, is triggering more economic angst. News of layoffs and hiring slowdowns have become commonplace across Silicon Valley. Start-ups are saying capital is drying up.
Social media company Snap’s stock fell nearly 40 percent Friday, the day after it reported worse-than-expected revenue growth and declined to give a prediction for future profit because of “uncertainties related to the operating environment.
“The market looks at that, and basically the logic is, ‘oh crap, if they’re doing this then what about the ones aren’t as strong?' ” said Tom Essaye, president of Sevens Report Research. “'And what are they seeing coming that everyone else isn’t?' ” Meta spokesman Tracy Clayton said the company would continue to make changes to some parts of its business because of the larger economic environment. Apple and Amazon did not respond to requests for comment. Google, Twitter and Snap declined to comment. Amazon founder Jeff Bezos owns The Washington Post.
As some of the most valuable companies in the world, they also wield outsize influence on perceptions of the economy, in part because of the nature of their businesses, which relies on consumer clicks and spending. Any downturn in demand for toilet paper sold by Amazon, Teslas or iPhones, as well as fewer ads bought on Instagram or Google search to try to sell people new shoes or headphones, is sure to create jitters in other spheres.
Tech has been signaling to investors for months that the boom times are ending — Amazon was one of the first tech giants to warn earlier this year that it had hired too many warehouse workers and had overbuilt anticipating higher customer demand that instead began to wane as coronavirus lockdowns were lifted and habits shifted out of pandemic modes.
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