Is the Future Bright for Tech Companies?
It has been a not so good week for technology stocks. Popularly known as FAANGs. A short name for Facebook, Amazon, Google, Apple and Netflix. Over the last ten years, these companies have performed well and experienced growth. However, the buzz generated has fizzled out. Web Designers Warrington is following this development.
All of the big five had their stocks lose value by more than 20%. It led to an erosion of a hundred billion dollars value. Apple who at the beginning of the year had made it past the one trillion dollar mark fell to 840 million dollars by Tuesday and had not yet recovered.
Amazon, which also had made past the $1 trillion mark, eroded to 731 billion dollars, these figures are enormous. Web Designers Warrington agrees that it’s a huge loss. Facebook was also trading in the same values it had in the previous year before the current scandals started taking shape.
However the scandals may be an indication of an underlying bigger problem, the biggest question is why the technology companies’ stocks values are on a decline.
The big five tech companies are very wealthy and have many staffs who are innovation experts and best planners. Their revenues are enormous. For example, Amazon’s Income surpassed that of Facebook and apple.
Due to global effects on the stock market resulting from a weak worldwide gross domestic product growth and anticipated trade hostility between the United States and China, tech companies are likely to suffer most. Web Designers Warrington agrees with this.
A new world order means there are some three significant shifts and this means there will be restrictions in their growth. It doesn’t mean the growth will stop but will definitely slow down
Tightening Global Monetary Policy
Ever since the financial boom happened, interest rates have remained relatively lower and this has been to the advantage of borrowers.
Lower interests mean that investors are optimistic about high returns. However, when the interests rise, investors expect also their profits to increase.
A threat to Nation-wide and international regulation
Legislators in major world cities are united in this cause, and perfect control of the big 5 is socially and economically necessary.
Rising nationalism in the global has limited the freedom of many international companies, and the technology giants are very much affected due to their global presence.
Are the tech companies overgrowing?
Reid Hoffman who is the co-owner of LinkedIn has written a book, Blitzcalling.
It states that the big companies are unapologetically pursuing to maximize their operations. The first scaler rather than the first mover will be the winner in many markets. That is why the financiers are comfortable with companies that are not raking profits like Uber. Web Designers Warrington feels the market will experience a change.
The iPhone has been the driver of Apple’s market share, but every new version in the growth is slower due to competitors coming up with similar projects. Web Designers Warrington has these in its websites.
Facebook has similarly slowed in growth in its main markets or Canada and Europe. It’s currently trying to concentrate its efforts on Instagram which is on an upward growth trajectory.
During the depression in the past decade, the tech companies were able to wither the effects.
They were able to grow during the low-interest regime. New markets have come up, and interest rates are on the rise and the markets are saturated
The interests rates might go up again, and the future can only be bleak.