The tech financial honeymoon is over

“It’s not a good time for technology in general,” said Paul Verna, an analyst at Insider Intelligence, a market research firm. “There is no doubt that companies will spend less, cut budgets and perhaps freeze hiring positions. None of that is good news for the next quarter,” Verna said.

Part of the effect that Netflix is ​​experiencing will be replicated with other companies. For example, Meta plans to cut engineering hiring by at least 30%, while Tesla CEO Elon Musk has pointed out that the coming recession will be inevitable for all companies.

“I think a recession is inevitable at some point. As for whether there is a recession in the short term, it is more likely than not. It’s not a certainty, but it seems more likely than not,” Musk said when asked by Bloomberg News editor-in-chief John Micklethwait.

Less profit equals more expensive prices

Another of the indicators that has been relevant to outline more complicated quarters in what follows of the year is inflation and the operating cost of various services. The US Department of Labor published that the consumer price index increased 9.1% annually in June, the largest increase since 1981.

While in Mexico, inflation in the first half of July will touch an annual rate of 8.10%, the highest rate since January 2001.

“The US economy will slide into a recession in the next 12 months if the Fed continues to raise interest rates,” said Haris Anwar, a senior analyst at Investing. in a publication of the financial platform.

“That’s the main reason we’re seeing a big sell-off in high-growth stocks as investors move their funds into areas of the market that are relatively safe.”

Those stocks that are moving include many in the tech industry. Some investors have predicted a tough earnings season, with Factset researchers anticipating a 4.3% growth rate in the S&P index, the lowest figure since the last quarter of 2020.

In the most recent report from the streaming company Netflix, a reduction of 2 million users in subscriptions was expected; however, the figure achieved was almost half. Even so, the platform anticipated that the coming quarters will be just as complex.

This company is not the only one suffering from the crisis. In April, Jeff Bezos issued a stark warning that the tech boom experienced during the pandemic would soon come to an end.

Apple, in early 2022, lost its status as the world’s most valuable company, contributing to a 13% drop in the Nasdaq Composite.

During the pandemic, tech companies like Peloton, Zoom, and Netflix experienced exponential growth as more people relied on technology to work and live online. However, this trend has ended.

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The tech financial honeymoon is over