The Tech Shock
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Tech stocks have dropped significantly since 2022 and, unfortunately when beginning the new year, there is no end to it slowing down.
“For the first time in five to ten years, big tech is seeing a significant degradation in fundamentals," the chief executive officer at Winslow Capital Management Justin Kelly said. “That’s a substantial change in the long-term outlook for these companies, and why they’re no longer the leadership.”
Looking back last year, there were many causes that resulted in the issues that tech companies are experiencing both then and now in 2023.
“War broke out between Russia and Ukraine, oil prices and inflation soared, wages remained low for many workers, interest rates rose and many feared the beginning of a recession,” a Forbes contributer said. “All of these factors combined to force stocks downward. These downturns particularly impacted tech.”
As a result of these factors, there has been a massive number of layoffs that have greatly impacted the tech workforce overall, which can lead to negative long-term effects for the future of companies.
"While layoffs from high-profile firms make the headlines, plenty of firms are desperate for more workers, especially tech workers,” corporate economist at Navy Federal Credit Union, Robert Frick said. “Those workers are in high demand from the auto industry to the Department of Veterans Affairs to not-for-profits."
Although the massive layoffs were necessary due to the significant changes in the tech company’s stock, it does not mean that all is lost. Tech companies can return to what they were known for, with or without a wider number of employees.
“It is a poorly kept secret in Silicon Valley that companies ranging from Google to Meta to Twitter to Uber could achieve similar levels of revenue with far fewer people,” tech investor at Altimeter Capital, Brad Gerstner said. “I would take it a step further and argue that these incredible companies would run even better and more efficiently without the layers and lethargy that comes with this extreme rate of employee expansion.”