Tech firms face the music

Analysts have been talking about a tech crash for years – and it might have just arrived. 

Rolling down a hill 

Let’s throw things back to late April. Firms were starting to report their Q1 results, and while the cost-of-living crunch was expected to have an impact on the numbers, nobody quite predicted the full force of the chaos. And yet! Facebook reported its first ever loss of users, while Netflix followed a few days later, triggering a massive sell-off in tech value.  

What does the picture look like a month on? It’s not pretty. The tech slide is in overdrive, and from index funds to ETFs to stocks and shares, tech firms are facing the largest correction in years. In recent days, Apple, Meta, Microsoft, Tesla, Amazon, and Alphabet have lost tens of billions, sometimes even hundreds of billions of dollars in value. And you thought you’d had a bad day… 

Party’s over 

So what’s behind the so-called ‘tech rout’? On the demand side of things, we can look to the usual suspects. The Fed’s interest rate hikes have triggered a sizable selloff, and as inflation bites into the incomes of millions of tech customers nationwide, households are having to make cutbacks. No more Stranger Things for us.  

But while tech is now in its first bear market in years, is all as it seems? You’ll remember that during the pandemic, while retailers were being routed, tech firms were rolling in the cash. Now, these ‘pandemic darlings’ – Netflix, Meta, and Zoom – are all having their wings trimmed. The falling figures are pretty dramatic, but is this a natural correction of the post-pandemic market? Optimistic investors are choosing to believe so.