6 ms·
> Like many companies, our business has been impacted by the current macroeconomic environment I must be living under a rock because, outside big tech self-inf
by gtirloni 4y ago
> Like many companies, our business has been impacted by the current macroeconomic environment
I must be living under a rock because, outside big tech self-inflicted wounds, I don't know what they are talking about. Is it Ukraine? SVB? Chinese housing market?
- mdavidn 4y agoThe "macroeconomic environment" is the evaporation of available VC funding because higher interest rates provide more lucrative investments elsewhere.
- runnerup 4y agoWhy would Amazon (owner of twitch) care about that? They have tons of cash and revenues are still quite strong. AMZN isn’t looking for VC funding, they are the whale. Net income is hard to judge — yes it’s down but not only is Amazon famous for reinvesting all profits and claiming $0 of net earnings, but they’ve also been writing off a lot of one time charges for severances related to these layoffs.
- gretch 4y agoBecause their income comes from advertising. Because the economy sucks in general, companies in all industries are being more careful with where they spend their marketing budget. You can see this reflected in the revenue of other advertising companies as well such as google and meta.
- aaomidi 4y agohttps://www.macrotrends.net/stocks/charts/GOOG/alphabet/revenue https://www.macrotrends.net/stocks/charts/GOOG/alphabet/reve... https://www.macrotrends.net/stocks/charts/META/meta-platforms/revenue https://www.macrotrends.net/stocks/charts/META/meta-platform... Is it?
- gretch 4y agouh yeah it literally is? click into your own links? Google has their 3rd worst quarter for YoY Quarterly growth out of the last 12 years. Facebook has 3 consecutive quarters of negative yoy growth
- slg 4y ago>Because the economy sucks in general But to be clear the economy does not currently "suck in general" hence the confusion over blaming "the current macroeconomic environment". These companies (including advertisers) are trying to get out in front of an economic downturn that hasn't yet materialized. And if it does materialize, all these companies will have a hand in causing it due to their reduced spending and layoffs which we know has potential to cause an economic slowdown.
- Kye 4y agoBelief in a coming downturn can cause one just as easily as some more tangible factor. Intro econ was a long time ago, but I think this is one of those It Is Known type things.
- Supermancho 4y ago> But to be clear the economy does not currently "suck in general" To be clear, what you say has little effect on reality. The decreased discretionary spending, housing market approaching a complete freeze, layoffs (those not being publicized in the news), inflation impacting every vertical, and the various shuttering businesses (survived covid, but died anyway), are what makes it "suck". This is not quantitative, but it is the sentiment.
- slg 4y ago>This is not quantitative, but it is the sentiment. I'm looking forward to our first "just bad vibes" recession in which all the quantitative numbers behind what you describe are mostly fine, but we are just going to "sentiment" ourselves into a recession anyway.
- jcfrei 4y agoAmazon (like every other big company) has raised billions with bonds that they will eventually need to refinance at higher rates.
- louison11 4y agoIf they laid off 400 employees, it’s probably because they could afford to (nice way of saying: they were not necessary to keep the business functioning), likely a bet on innovation. As the economy struggles and the prospects of such innovation happening seem far, it makes sense that even a big company like Amazon may choose to cut their losses.
- coredog64 4y agoAmazon needs to provide attractive returns to shareholders just like a unicorn. If you $AMZN is not up 5% YoY, then sell it and park it in a 6 month T-bill or I series bond. And as holder of $AMZN, I can tell you that they are definitely not up 5% YoY, let alone the 15% that they generally try to get to.
- TylerE 4y agoMYbe it’s time for them to realize there is a point where you have all of the customers, and it’s ok to be boring and just pay a dividend instead of constant growthgrowthgrowthgrowth.
- rossdavidh 4y agoThe owner of Amazon was the prime beneficiary of VC funding to tech companies, because oftentimes a large chunk of that went for AWS. In that gold rush, Amazon was the one selling shovels. The gold rush is now over, for a while at least, so Amazon is probably seeing a lot of their big AWS customers cutting back, or in some cases disappearing. Essentially, AWS is in the same position as SVBank. If your money comes from lots of tech startups that don't want to have their own infrastructure, and didn't used to need to worry about cutting costs, but now they do, then you can see big "outflows" (except unlike SVB it's more decreasing revenue).
- fma 4y agoWhy do you say "probably seeing a lot of their big AWS vueomters cutting back" when it can be verified. AWS grew at 20% in Q4 2022. Grew less than forecasted but still not "disappearing". https://www.cnbc.com/2023/02/02/amazon-aws-earnings-q4-2022.html https://www.cnbc.com/2023/02/02/amazon-aws-earnings-q4-2022....
- jacooper 4y agoBut Twitch is owned by Amazon? They don't need VCs?
- re-thc 4y agoThe users that use and pay Twitch do? (Not VC but capital in general)
- umeshunni 4y agoTheir source of revenue (i.e. advertisers) are often startups and DTC brands that were kept alive by VC money.
- djent 4y agoI have never seen an advertisement for a startup on Twitch.
- TylerE 4y agoYou mean they aren’t flooded with meal kit and mattress ads like every other form of media?
- AraceliHarker 4y agoSmall businesses like startups would rather pay streamers directly to promote their products than advertise on Twitch.
- ryanSrich 4y agoHuh? LPs don’t put money into a VC fund for 4% returns that they can get on bonds. They do it mostly out of diversification. Usually looking for 10-100x. Why would that change?
- vineyardmike 4y agoBonds are essentially the "free" rate of return. Assuming you trust the government, there's no reason to earn anything less. That means that everything needs to return something above the bond rate. That goes for debt too, why would you write a riskier loan to someone at a lower rate than the government? LPs looking to put their money somewhere (or many somewheres) will reconsider as rates change. It might not be "vc or bond" but it will cause every part of the financial system to re-calibrate. Maybe a rich person takes out debt against their assets to invest in a VC fund in 2020, but now that the rates rose and stock values fell, the interest rate on that (or comparable) debt is too expensive. For example, Elon's loans for twitter range from 6% to 11%, and would likely be higher if written today. TLDR Interest rates don't need to compare 1:1 to a VC fund's returns to have an affect on the decision by LPs to invest in it.
- vkou 4y agoThe macroeconomic trend is 'the stock price went down because the fed stopped printing money'.
- runnerup 4y agoI don’t understand how this is affecting AMZN’s cash flow though. Seems like both their costs and revenues would scale similarly with inflationary effects, leaving a similar profit margin %.
- nonethewiser 4y agoI think it’s more about expectation for growth being lower, not present cash flow.
- kneebonian 4y agoOnce you realize that sometime in the past 10-20 years the economy started having nothing to do with actual goods and services and instead turned into some sort of weird game played by the powerful and the rich it makes more sense. Personally I peg it happening sometime around 2008 when it became clear the rules didn't matter, consequences were for the poor and party hearty. Explain how else a company like Uber that was losing money on every ride was able to raise billions in VC funding. Think of it like that and it makes more sense.
- paulryanrogers 4y agoVCs want to capture markets. That's why they pour money into launching what could be the next market leader, even if the model won't work at predatory prices. Because once they own the market they can raise the prices to whatever they want.
- this_user 4y agoAll of that is a direct consequence of low interest rates. If money is cheap and easy to borrow, there is less pressure on a business like Uber to turn an actual profit. Instead, investors will encourage them to grow aggressively in the hopes of capturing the market. Once liquidity dries up, there will be more pressure to actually make money. But the economy is working as intended and it's actors are merely reacting to incentives. The question is whether the wrong incentives have been set that have created large sectors of the economy that are completely dependent on permanently low interest rates.
- jacooper 4y agoIts the investors.
- nonethewiser 4y agoI assumed rising interest rates primarily.
- gretch 4y agoFederal reserve interest rates. When interest rates are low, money flows more freely. When interests rates are up, it's harder to lend/borrow, money flows less freely, and the economy cinches up as a whole. This is a major simplification to a very complex system, but it happens because e.g. as someone with money, you'd rather just put it into a government bond that will for sure pay you 4%, rather than chasing speculative investments. When that same bond is only paying out 1%, you might be more inclined to put your money in a start up and see what happens.
- Aperocky 4y agoNot just your money, renting money is so much cheaper when you only need to pay 0.25% per year against the firehose known as the Fed.
- mym1990 4y agoIf this is the case, why are layoffs currently mostly in the tech sector and not everywhere? Unemployment budged .2% from Jan - Feb but this is hardly indicative of anything.
- coredog64 4y agoThe tech sector is doubly impacted. First, a lot of these ZIRP jobs are in technology as that’s where the returns are. Second, there’s another class of tech jobs that are themselves dependent on tech companies (Cloud providers, managed SaaS products, etc.)
- yieldcrv 4y agobecause tech was was the biggest beneficiary of monetary expansion, at least by percentage gains in a sector, and would have to be a close second in absolute dollar amounts if not first. basically TINA principle: there is no alternative, which means that an infinite amount of money was created for a finite amount of assets, people that are paranoid about beating a couple months of high inflation didn’t know where to put the money established industries with clear revenue trends already had stretched and unattractive valuations real estate already went to unconscionable price levels government bonds at record prices and lowest yields, in Europe people would accept negative interest rates literally willing to pay the government instead of investing in unproven businesses but between the unproven entrepreneur there was still lots of big tech that was the recipient of cheap money and high valuations. now people are rebalancing. new money isn't being created and existing money is purchasing treasuries at 5%
- sanderjd 4y agoI don't know for sure, but it seems to me that advertising spend must be way down, due to interest rates and (related) the expectation that consumer spending will / should be pulling back over the next X months. All the biggest layoffs seem downstream from consumer spending in some way or another.
- tinus_hn 4y agoTwitch grew very quickly during lockdown and shrank very quickly when it was over.
- ryanSrich 4y agoSVB as an excuse for any company turmoil is criminal. Literally nothing happened. Everyone got all of their money. If any company uses SVB as an excuse they must be named and ridiculed for lying.
- karmasimida 4y agoI guess Twitch still hardly making any money
- chii 4y agodespite the huge number of ads being shoved into the user's faces.
- andreimackenzie 4y agoAdvertisers not spending as much
- Rastonbury 4y agoAdvertising, which is how twitch makes money, look at GOOG, FB, Snap revenues, companies are bracing for a recession so have dialed back ad budgets. Enterprise tech spend and consulting/professional services budgets are also being put on hold, it's not the whole economy but the slowdown is clear and obvious in these industries
- PurpleRamen 4y agoIn case of twitch it's more simple: pandemia is ending, people move back to their normal life outside of twitch. Revenue in the last months has been shrinking for streamers, and thus also for twitch. Their business was blowing up in the last 2-3 years, when so many viewers were at home. And this also resulted in Twitch hiring many new people, like so many other tech-companies. And like so many others, they are now shrinking again, adapting to the new situation.