Big Tech is looking smaller every day — if you are using stock prices as a yardstick.
Tuesday’s dismal showing showed more of the same, variations on a theme that has been pretty steady through the past several weeks.
Tech stocks, of course, have been hammered, from the largest firms on down to the smallest digital-only players. Tuesday saw the tech-heavy Nasdaq sink 4% on the session.
And in the who’s who of who’s getting a drubbing, shares in Meta were down 3.2% into the close, Apple shrank by more than 3.6%, Microsoft sank about 3.6%. The Nasdaq is down about 20% year to date.
And, we note: Earnings season is not fully behind us. In fact volatility looks set to continue when we see everyone from Alphabet to Apple to Microsoft will give their updates (the numbers are coming out as we speak). Beyond the sales of iPhones, the embrace of the cloud, what YouTube might have logged in eyeballs and ads, it still remains to be seen what the tone of consumer spending was, and is — and importantly, will be.
It’s too pat to state that inflation will be the only thing that bedevils these companies and presents challenges. Yes, with prices rising 8%-plus year over year, it will not be surprising to see that consumers might pull back on cellphones or gaming systems or tablets. Initially, with some read across on numbers coming out after the close, MSFT cloud revenues were up 26%, Google’s ad revenues gained 22%.
Sticking to Essentials
As PYMNTS research has shown, a majority of consumers are sticking to essentials. For the platform firms, and for the streaming firms (gaming, in particular) subscriber rosters may be pressured, too, with the COVID pull-forward that hit Netflix in evidence at other larger tech firms.
Amazon, too, was off significantly on Tuesday, slipping more than 4.5%. It seems that eCommerce will not be immune to the pressures that are mounting. As noted by PYMNTS earlier in the day, trucking is seeing a downturn, and UPS’ parcel volumes are declining — not the most positive read-across for Amazon.
To add some additional kindling to the fire, Big Tech will come under increasing regulatory scrutiny tied to payments and commerce plans.
Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra testified before the Senate Banking Committee that “currently, the United States is lurching toward a consolidated market structure where finance and commerce co-mingle fueled by uncontrolled flows of consumer data.” He noted, too, that with a nod to Alipay and others, “the outsized influence of such dominant tech conglomerates over the financial services ecosystem comes with risks and raises a host of questions about privacy, fraud, discrimination and more.”
As the saying goes, and especially for Big Tech, when it rains it pours.
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