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I suspect we're about to see a prolonged weakness in tech. Ad revenue will drop due to a weak economy. Higher interest rates will expose many business models(

I suspect we're about to see a prolonged weakness in tech. Ad revenue will drop due to a weak economy. Higher interest rates will expose many business models(Uber, Doordash, etc) as unsustainable. Netflix crashing likely popped the bubble in streaming services and Hulu. People are realizing Netflix is the next TiVo and streaming services with monthly subscriptions are a 'race to the bottom' and content(which is currently not cheap to produce) is king. Even with content, users can sign up, binge, and quit after a single month. All of these services crashing will slow sales of enterprise HW and AI accelerators. Now is probably a good time to shift your investments to things people need, not things they want. If you're in tech, I hope you've diversified your assets.

samspenc 5y ago
I feel like FB / meta stock crashing after last quarter's earnings miss was the first warning, and today Netflix stock cratered after a miss as well. I'm not sure if we will see a crash or recession however I do believe all the factors you mentioned will set off a drop in valuations and hence the stock market.
- robbedpeter 5y ago
  Facebook just sucks all on its own, I don't think it's failing because of any larger market trend. Meta has only itself and overweening arrogance to blame for its failure. They've got enough money to make dying a long and tedious process.
_huayra_ 5y ago
This is especially true to people who get paid in RSUs or do ESPP through their employer. Even FAANG employees should not really sit on these to get the maturation of these stocks to cap gains, as they'll likely go down by a larger margin in a year. This is gonna be a wild few years ahead of us one way or another.
- ChuckMcM 5y ago
  My take on it is that every new generation has to learn this lesson the "hard way" if only because they are pumped by people saying "Yeah, this time it is different."
- hef19898 5y ago
  I don't know, the two hardware As in FAANG, Apple and Amazon, are doing quite well on the stock markets. But yes, RSUs and stock options shouldn't be treated as part of your salary. Instead it's best to treat them as a bonus you don't necessarily need.
  - bagacrap 5y ago
    Amazon has traded sideways for a year and a half. F, N are cratering, Amzn is sideways, Aapl is still way up yoy (seems vulnerable this earnings season though), MSFT has been good historically but worse this year and seems vulnerable. Google has had a good run recently but is weak this year, however P/E is already in a better place than its competitors so it has room to run I'd say.
    - hef19898 5y ago
      Ha, didn't track my AMZN stock since I thought they might go down to around 1k early in the pandemic to rebuy some. They never did. Well, trading sideways isn't too bad, so, considering how other tech stocks developed.
- philjohn 5y ago
  Somewhat lucky that in the UK it's no less tax efficient to sell straight away, which is what I always do. I know of a non-zero amount of people though in the US hit by the low withholding on RSU's and then having a big tax bill, based on their value at vest before a stock drop.
  - bagacrap 5y ago
    there shouldn't be a low withholding on RSUs if your settings are correct, e.g. "I expect to make more than 400k this year". it shouldn't matter if stocks drop after vest since the withholding is taken out of the RSU vest amount.
mgh2 5y ago
All these investments will have to go somewhere else- the only non ad involved company in FAANG is Apple
- mertd 5y ago
  > the only non ad involved company in FAANG is Apple A good chunk of Apple's profit is the annual payment from Google.
- ehnto 5y ago
  The investments would be going to companies other than FAANG, and there are plenty of software industries that aren't ad-propelled. The reduction of influence from adtech may even be a boon for practical software industries, where currently they are all competing for capital and talent against the VC and revenue of ad-propelled businesses. I've long said tech wages need to come back to reality, so that the rest of the world can get back to building software for the rest of the world, not just the tech bubble compatible ventures. I think adtech and online advertising propping itself up is part of the problem.
- kevinh 5y ago
  Apple sells ads. https://searchads.apple.com/ https://searchads.apple.com/
  - denkmoon 5y ago
    At the risk of moving the goalposts, that surely can't make up any significant portion of their revenues.
    - somenameforme 5y ago
      Apple defaulting to Google search in exchange for tens of billions of dollars almost certainly suffices to declare them an "ad involved company" as per the original phrasing in this thread. And that is a very significant chunk of their net revenue bearing in mind that there is effectively zero cost to Apple for this deal.
- 5y ago
1270018080 5y ago
You're only listing consumer product tech. There are other tech industries out there with plenty of room to make money. Also question: Why would high interest rates expose Uber etc?
- ehnto 5y ago
  I don't think you need anything to expose Uber, I can't believe they still run at all. 20billion in loss and no end in sight, they've failed to create a moat and they've failed to dethrone the taxi industry.
  - deleted 5y ago
    [deleted]
- c0balt 5y ago
  Uber afaik runs at a relative high loss at the moment. You'll find a bunch of articles on this topic by searching for their last quarters report. As far as I understandincrease in interest rates could make them running at a profit hard/ very unlikely in the future because covering high-interest loans will become hard. Further, it potentially could limit their cashflow, which impacts growth etc. Many other factors, such as new investemnts or a decrease in individual travel, could influence this too of course. Though for a growth-centric company a limit on credit seems to be one of the harshest limitations.
  - weatherlite 5y ago
    Also, high interest rate means investors can invest by buying bonds (and earning the interest) instead of investing in high risk growth companies. It's basically bad for stocks in general and particularly for growth stocks.
- lordnacho 5y ago
  The higher interest rates are, the more income in the future is discounted. If you assign any income to them in the future you need to assign less, but their costs are immediate.
shadowofneptune 5y ago
Streaming is a funny one. I was led, as I'm sure others were, to think of streaming as new media vs. old media. The talk around the recent stock dip made me find out it wasn't the case. Now there's Disney+, Peacock, etc., and it turns out the old media's pretty good at streaming. We might not see any businesses solely based around streaming in the future.
- nickff 5y ago
  It was never really clear what the disruptive innovation was supposed to be. It seems like the only 'streaming' company with an advantageous cost structure and differentiated business model is YouTube.
  - paranoidrobot 5y ago
    > It was never really clear what the disruptive innovation was supposed to be. Unbundling TV/Movie content from Cable providers was the disruption. You wouldn't need to pay for Cable TV just to get internet. You wouldn't need to pay for Broadband, just to watch the show you wanted - assuming you had internet access some other way. It also offered the promise of relaxing control of where/when/how you watched content. Content on Demand used to be a premium feature, you largely had content delivered to you in channels, and only a limited range. You could record content to watch it later, but that required another device (or a Cable box capable of doing it) Location was also tightly controlled - you could only watch certain content in one room, in one house. Wanted to watch a movie in your Hotel Room? Buy it from the Hotel. At your friends' place while you're staying with them? Only if they had the right Cable subscription. Yes, Cable companies offered streaming, and on demand, and all that other stuff - but largely only after Netflix had proven it out.
    - rchaud 5y ago
      > Cable companies offered streaming, and on demand, and all that other stuff - but largely only after Netflix had proven it out. In other words, they waited for Netflix to do the expensive and risky work of building out the market and refining the streaming infrastructure. Then they used the money they got from licensing their IP to Netflix and built out their own offerings. Sounds like good business.
lordnacho 5y ago
Any perspective on what this means for engineers who get paid comp in stocks? Seems like some pretty big dips in certain companies. Do they tend to just give out more shares when that happens?
- bagels 5y ago
  No, you deal with it or jump ship to get in somewhere else at current valuations.
- itake 5y ago
  You deal with it or jump ship. This is particularly painful for hiring managers, b/c companies give offers with higher RSUs than they are currently personally vesting for roles below them.
- automatic6131 5y ago
  >Any perspective on what this means for engineers who get paid comp in stocks? Probably accept that the situation where you could get paid 10-20x the median salary is coming to a close.
- deleted 5y ago
  [deleted]
grapeskin 5y ago
> Even with content, users can sign up, binge, and quit after a single month. This just made me realize the next big step is likely paying for monthly access to the service, then paying to unlock the content. Similar to games that hide features behind DLC. I wouldn’t be surprised if resetting your unlocked content if you let your monthly payments expire was another step forward.
- sjamaan 5y ago
  Paying for the content is what Apple TV is doing, isn't it? You can "rent" (one-time view) a video for a lower price, or "buy" the video at a higher price (which isn't the same as owning it, of course. It just allows you to watch it more than once). But you're still paying per individual movie.
- robbedpeter 5y ago
  The best next step is canceling all the services and subscriptions except VPN and internet, then hoisting the jolly roger. I'm done pretending the studios and content creators are good faith operators. I've paid over 6 figures in the last 20 years for movies, shows, books. I'm not paying any more, and I don't feel bad about it at all. Netflix had a great library, but the industry caught up and licensing and copyright induced fragmentation made streaming platforms more or less equally shitty. There's no more value add if the apps, content, and curation don't work, or if they start sneaking in advertisements or if the companies are engaging in regulatory capture or other malicious corporate fuckery. Avast, mateys, time to keelhaul the bastards in charge (or their pocketbooks.)
  - hef19898 5y ago
    Yeah, we went from illegal streaming to copyright owners providing easy legal access back to a clustered, region restricted system of legal streaming services. And region restricted, clustered environment was a large part (together with the absence of any legal services) why pirating content was a thing in the first place.
- BeFlatXIII 5y ago
  That way lies a resurgence of piracy as a social norm.
iso1210 5y ago
Netflix should have been spending its money buying legacy studios - Paramount for example and their god-awful 1990s production mentality (region locked trailers - really?), not to mention a massive backlog. £35b, it's a lot, but Netflix is worth 5 times that at least, even after yesterday's crash, let alone what it was worth a year ago. Disney gets the new landscape. They give early access to tons of youtubers and you can't move on yourtube without bumping into the latest breakdowns, rections etc about an episode of moon knight or a teaser trailer, shows are released globally within hours, and they have a massive back catalogue. Amazon bought MGM, bringing in things like Stargate and Bond, but it's dabbling, if their video service stops, it doesn't really cause the company to fail. Apple doesn't seem to know where it wants to go, it's not really in the game, but it's not their core competency either. Netflix had an opportunity to secure their catalogues a couple of years ago, but just threw money at trying to create original content but not really knowing how (and certainly not knowing how to do it efficently)
- hef19898 5y ago
  It's almost that legacy industries actually do know things disruptors don't, and sometimes these things can come back at the disruptors. Like the way episodes of TV series used to be aired, weekly with defined timeslots. We went from that to making whole seasons available at once, and now back to weekly airings without a fixed timeslot for blockbuster series like everything Star Wars or Picard. It's almost like broadcasters had reason to air episodes weekly.
  - iso1210 5y ago
    On the other hand the pathetic handling of global release for modern trek (Discovery season 4 being uplled 2 days before air led to a massive backlash, no Prodigy, Paramount are more concerned with differentiating international markets then driving more viewers, there's no attmept to engage with youtube 'influencers') Paramount etc can make stuff, but they don't get the global media landscape in a way netflix and disney do, and I think similar can be said about other well established media companies.
  - prostoalex 5y ago
MrMan 5y ago
did that 6 months ago
cercatrova 5y ago
> Now is probably a good time to shift your investments to things people need, not things they want. If you're in tech, I hope you've diversified your assets. People should be investing in total stock market index funds like VTI anyway, individual companies crashing should not affect one's investing philosophy.
la6472 5y ago
Remember dot com? How the tech sector crashed and burnt , yet those very technologies established the foundation for the next generation of companies that dominates till today. So while I agree that companies like Netflix or Uber may take a hit in the short ten I will argue that in the long term they are not going to go anywhere and will grow bigger.

samspenc 5y ago

I feel like FB / meta stock crashing after last quarter's earnings miss was the first warning, and today Netflix stock cratered after a miss as well. I'm not sure if we will see a crash or recession however I do believe all the factors you mentioned will set off a drop in valuations and hence the stock market.

robbedpeter 5y ago
Facebook just sucks all on its own, I don't think it's failing because of any larger market trend. Meta has only itself and overweening arrogance to blame for its failure. They've got enough money to make dying a long and tedious process.

_huayra_ 5y ago

This is especially true to people who get paid in RSUs or do ESPP through their employer. Even FAANG employees should not really sit on these to get the maturation of these stocks to cap gains, as they'll likely go down by a larger margin in a year. This is gonna be a wild few years ahead of us one way or another.

ChuckMcM 5y ago
My take on it is that every new generation has to learn this lesson the "hard way" if only because they are pumped by people saying "Yeah, this time it is different."
hef19898 5y ago
I don't know, the two hardware As in FAANG, Apple and Amazon, are doing quite well on the stock markets. But yes, RSUs and stock options shouldn't be treated as part of your salary. Instead it's best to treat them as a bonus you don't necessarily need.
- bagacrap 5y ago
  Amazon has traded sideways for a year and a half. F, N are cratering, Amzn is sideways, Aapl is still way up yoy (seems vulnerable this earnings season though), MSFT has been good historically but worse this year and seems vulnerable. Google has had a good run recently but is weak this year, however P/E is already in a better place than its competitors so it has room to run I'd say.
  - hef19898 5y ago
    Ha, didn't track my AMZN stock since I thought they might go down to around 1k early in the pandemic to rebuy some. They never did. Well, trading sideways isn't too bad, so, considering how other tech stocks developed.
philjohn 5y ago
Somewhat lucky that in the UK it's no less tax efficient to sell straight away, which is what I always do. I know of a non-zero amount of people though in the US hit by the low withholding on RSU's and then having a big tax bill, based on their value at vest before a stock drop.
- bagacrap 5y ago
  there shouldn't be a low withholding on RSUs if your settings are correct, e.g. "I expect to make more than 400k this year". it shouldn't matter if stocks drop after vest since the withholding is taken out of the RSU vest amount.

mgh2 5y ago

All these investments will have to go somewhere else- the only non ad involved company in FAANG is Apple

mertd 5y ago
> the only non ad involved company in FAANG is Apple A good chunk of Apple's profit is the annual payment from Google.
ehnto 5y ago
The investments would be going to companies other than FAANG, and there are plenty of software industries that aren't ad-propelled. The reduction of influence from adtech may even be a boon for practical software industries, where currently they are all competing for capital and talent against the VC and revenue of ad-propelled businesses. I've long said tech wages need to come back to reality, so that the rest of the world can get back to building software for the rest of the world, not just the tech bubble compatible ventures. I think adtech and online advertising propping itself up is part of the problem.
kevinh 5y ago
Apple sells ads. https://searchads.apple.com/ https://searchads.apple.com/
- denkmoon 5y ago
  At the risk of moving the goalposts, that surely can't make up any significant portion of their revenues.
  - somenameforme 5y ago
    Apple defaulting to Google search in exchange for tens of billions of dollars almost certainly suffices to declare them an "ad involved company" as per the original phrasing in this thread. And that is a very significant chunk of their net revenue bearing in mind that there is effectively zero cost to Apple for this deal.
5y ago

1270018080 5y ago

You're only listing consumer product tech. There are other tech industries out there with plenty of room to make money. Also question: Why would high interest rates expose Uber etc?

ehnto 5y ago
I don't think you need anything to expose Uber, I can't believe they still run at all. 20billion in loss and no end in sight, they've failed to create a moat and they've failed to dethrone the taxi industry.
- deleted 5y ago
  [deleted]
c0balt 5y ago
Uber afaik runs at a relative high loss at the moment. You'll find a bunch of articles on this topic by searching for their last quarters report. As far as I understandincrease in interest rates could make them running at a profit hard/ very unlikely in the future because covering high-interest loans will become hard. Further, it potentially could limit their cashflow, which impacts growth etc. Many other factors, such as new investemnts or a decrease in individual travel, could influence this too of course. Though for a growth-centric company a limit on credit seems to be one of the harshest limitations.
- weatherlite 5y ago
  Also, high interest rate means investors can invest by buying bonds (and earning the interest) instead of investing in high risk growth companies. It's basically bad for stocks in general and particularly for growth stocks.
lordnacho 5y ago
The higher interest rates are, the more income in the future is discounted. If you assign any income to them in the future you need to assign less, but their costs are immediate.

shadowofneptune 5y ago

Streaming is a funny one. I was led, as I'm sure others were, to think of streaming as new media vs. old media. The talk around the recent stock dip made me find out it wasn't the case. Now there's Disney+, Peacock, etc., and it turns out the old media's pretty good at streaming. We might not see any businesses solely based around streaming in the future.

nickff 5y ago
It was never really clear what the disruptive innovation was supposed to be. It seems like the only 'streaming' company with an advantageous cost structure and differentiated business model is YouTube.
- paranoidrobot 5y ago
  > It was never really clear what the disruptive innovation was supposed to be. Unbundling TV/Movie content from Cable providers was the disruption. You wouldn't need to pay for Cable TV just to get internet. You wouldn't need to pay for Broadband, just to watch the show you wanted - assuming you had internet access some other way. It also offered the promise of relaxing control of where/when/how you watched content. Content on Demand used to be a premium feature, you largely had content delivered to you in channels, and only a limited range. You could record content to watch it later, but that required another device (or a Cable box capable of doing it) Location was also tightly controlled - you could only watch certain content in one room, in one house. Wanted to watch a movie in your Hotel Room? Buy it from the Hotel. At your friends' place while you're staying with them? Only if they had the right Cable subscription. Yes, Cable companies offered streaming, and on demand, and all that other stuff - but largely only after Netflix had proven it out.
  - rchaud 5y ago
    > Cable companies offered streaming, and on demand, and all that other stuff - but largely only after Netflix had proven it out. In other words, they waited for Netflix to do the expensive and risky work of building out the market and refining the streaming infrastructure. Then they used the money they got from licensing their IP to Netflix and built out their own offerings. Sounds like good business.

lordnacho 5y ago

Any perspective on what this means for engineers who get paid comp in stocks? Seems like some pretty big dips in certain companies. Do they tend to just give out more shares when that happens?

bagels 5y ago
No, you deal with it or jump ship to get in somewhere else at current valuations.
itake 5y ago
You deal with it or jump ship. This is particularly painful for hiring managers, b/c companies give offers with higher RSUs than they are currently personally vesting for roles below them.
automatic6131 5y ago
>Any perspective on what this means for engineers who get paid comp in stocks? Probably accept that the situation where you could get paid 10-20x the median salary is coming to a close.
deleted 5y ago
[deleted]

grapeskin 5y ago

> Even with content, users can sign up, binge, and quit after a single month. This just made me realize the next big step is likely paying for monthly access to the service, then paying to unlock the content. Similar to games that hide features behind DLC. I wouldn’t be surprised if resetting your unlocked content if you let your monthly payments expire was another step forward.

sjamaan 5y ago
Paying for the content is what Apple TV is doing, isn't it? You can "rent" (one-time view) a video for a lower price, or "buy" the video at a higher price (which isn't the same as owning it, of course. It just allows you to watch it more than once). But you're still paying per individual movie.
robbedpeter 5y ago
The best next step is canceling all the services and subscriptions except VPN and internet, then hoisting the jolly roger. I'm done pretending the studios and content creators are good faith operators. I've paid over 6 figures in the last 20 years for movies, shows, books. I'm not paying any more, and I don't feel bad about it at all. Netflix had a great library, but the industry caught up and licensing and copyright induced fragmentation made streaming platforms more or less equally shitty. There's no more value add if the apps, content, and curation don't work, or if they start sneaking in advertisements or if the companies are engaging in regulatory capture or other malicious corporate fuckery. Avast, mateys, time to keelhaul the bastards in charge (or their pocketbooks.)
- hef19898 5y ago
  Yeah, we went from illegal streaming to copyright owners providing easy legal access back to a clustered, region restricted system of legal streaming services. And region restricted, clustered environment was a large part (together with the absence of any legal services) why pirating content was a thing in the first place.
BeFlatXIII 5y ago
That way lies a resurgence of piracy as a social norm.

iso1210 5y ago

Netflix should have been spending its money buying legacy studios - Paramount for example and their god-awful 1990s production mentality (region locked trailers - really?), not to mention a massive backlog. £35b, it's a lot, but Netflix is worth 5 times that at least, even after yesterday's crash, let alone what it was worth a year ago. Disney gets the new landscape. They give early access to tons of youtubers and you can't move on yourtube without bumping into the latest breakdowns, rections etc about an episode of moon knight or a teaser trailer, shows are released globally within hours, and they have a massive back catalogue. Amazon bought MGM, bringing in things like Stargate and Bond, but it's dabbling, if their video service stops, it doesn't really cause the company to fail. Apple doesn't seem to know where it wants to go, it's not really in the game, but it's not their core competency either. Netflix had an opportunity to secure their catalogues a couple of years ago, but just threw money at trying to create original content but not really knowing how (and certainly not knowing how to do it efficently)

hef19898 5y ago
It's almost that legacy industries actually do know things disruptors don't, and sometimes these things can come back at the disruptors. Like the way episodes of TV series used to be aired, weekly with defined timeslots. We went from that to making whole seasons available at once, and now back to weekly airings without a fixed timeslot for blockbuster series like everything Star Wars or Picard. It's almost like broadcasters had reason to air episodes weekly.
- iso1210 5y ago
  On the other hand the pathetic handling of global release for modern trek (Discovery season 4 being uplled 2 days before air led to a massive backlash, no Prodigy, Paramount are more concerned with differentiating international markets then driving more viewers, there's no attmept to engage with youtube 'influencers') Paramount etc can make stuff, but they don't get the global media landscape in a way netflix and disney do, and I think similar can be said about other well established media companies.
- prostoalex 5y ago

MrMan 5y ago

did that 6 months ago

cercatrova 5y ago

> Now is probably a good time to shift your investments to things people need, not things they want. If you're in tech, I hope you've diversified your assets. People should be investing in total stock market index funds like VTI anyway, individual companies crashing should not affect one's investing philosophy.

la6472 5y ago

Remember dot com? How the tech sector crashed and burnt , yet those very technologies established the foundation for the next generation of companies that dominates till today. So while I agree that companies like Netflix or Uber may take a hit in the short ten I will argue that in the long term they are not going to go anywhere and will grow bigger.