Tech stocks have soared for many years. Until recently, their CEOs had god-like status. The extraordinary growth of companies like Google, Facebook, Apple, Netflix et al made these CEOs both rich and powerful. They were seen as conjurers of a new age where Google Maps, WhatsApp and YouTube changed people’s habits and lives. Share prices skyrocketed, employees got free meals, even massages, and the laws of economic gravity did not apply.
This month, the gods have fallen to earth. None other than Mark Zuckerberg fired 11,000 employees, about 13% of his company’s workforce. Other tech companies have also been firing employees. The reason is simple: profitability has been decreasing and share prices have been falling.
Financial reports of many tech companies disappointed markets because of a combination of poor investments, bloated expenditure and iffy vanity projects. Zuckerberg’s fixation with the metaverse has not gone well. Neither has Elon Musk’s takeover of Twitter. Sam Bankman-Fried, the celebrated crypto billionaire is now under arrest.
Atul Singh and Glenn Carle make sense of this collapsing tech bubble, analyze the causes for this collapse and examine its potential consequences.
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