Here’s a fun fact: The U.S. tech industry has shed more than 350,000 jobs since the beginning of 2022. On the other hand, the economy as a whole added millions of new employees, with overall unemployment hovering near a record low of 3.4%. On the other other hand, tech stocks have significantly outperformed the broader S&P (up 24% versus 10% as of May 16) since the beginning of the year. This is despite the “challenging macroeconomic environment” that has been the refrain of every tech company’s earnings call in recent memory.
There are probably a few reasons behind this apparent incongruity between layoffs and stock performance. The simple version: Layoffs = companies taking steps to run lean now that capital has dried up, which investors reward by sending stock prices higher. The bizarro world of the Rona sent tech stock valuations through the roof, causing a hiring spree. The subsequent crash that sunk tech stocks (at least temporarily) and startup valuations forced some soul-searching around growth at all costs.
The big takeaway: tech companies over-hired a lot of overpriced talent. Consider that the average tech worker makes at least six figures. Some back-of-the
Sign up to our newsletter to get more of our great research delivered straight to your inbox!
Nanalyze Weekly includes useful insights written by our team of underpaid MBAs, research on new disruptive technology stocks flying under the radar, and summaries of our recent research. Always 100% free.
Become a premium member and get access to hundreds of premium articles, reports and additional content.
Nanalyze Premium is your comprehensive guide to investing in disruptive technologies. Read by the top investment banks, management consultancies, VCs, and research houses. Trusted by over 100,000 institutional and retail investors. Covering disruptive technologies for over 18 years.