With the great wave of layoffs that has been taking place in the technology sector, many former employees of these large companies now crowd the secondary market with their shares, which could cause a further collapse of those valuations; many analysts consider that this will not be reversed until the Federal Reserve finalizes its strategy of raising interest rates.
So far the tech industry They have recorded more than 90,000 layoffs only in 2022, and the figures continue, Google for example; assured that it will cut 12,000 jobs, Amazon announced that its payroll will be 18,000 and Microsoft reported some 10,000 layoffs, all this in the midst of a wobbly economy and cost reduction.
But now, many of the former employees who enjoyed high salaries and comfortable offices are caught up in the uncertainty of falling stocks. During 2020, the valuations of some technology companies skyrocketedallowing their inflated shares to retain their staff.
Workers were paid with excessive share-based compensations. This managed to sustain the sector during its boom, however the same strategy that worked at the time is having the opposite effect as many of the valuations of these large companies plummet.
For example, in the last year the Invesco QQQ Trust (NASDAQ:QQQ), a fund that tracks tech stocks, under 15%, the same for private companies that have seen a decline of up to 80%. For that reason, anticipating the future of these companies, many former employees They use secondary markets to cash in on their shares.
For now, investors should pay close attention to the profitability of companies that have been punished during this time. In 2023, Apple shares may be an ideal investment target, to date they remain at 24.7 times earnings, becoming one of the most profitable in the technology market.
Adobe is also one of the companies that is in the sights of large shareholders, last year reported $17.61 billion in revenue, up 12% from the prior year. It also announced that it will incorporate artificial intelligence from OpenAI with Figma, which makes it attractive to some investors.
It may interest you:
Why Apple is the only technology company that has not announced layoffs
How the wave of massive layoffs in Silicon Valley shows the mistakes of giants like Twitter, Facebook or Amazon
Source: La Opinion
