Tech’s painful 2000 flashback

For the tech industry, 2022 unfortunately looks like 2000.

Big picture: Both this year and 2000, tech stocks plummeted in the spring after peaking in the stratosphere. Half a year later, As the recession loomed, large companies began laying off staff and start-ups began measuring burn rate runway.

Other similarities: The 2000 market, like today, was hit by the Fed tightening interest rates after looser monetary policy (the 2000 market was to protect against the 2000 bug problem). And in November 2000, just like today, the United States was headed for tough national elections.

Back in the fall of 2000, CEOs and employees knew the dot-com mania was over.

• But they couldn’t help but know that they were on the brink of a major market collapse that would last for several years, leveling most of the industry and clearing the field for new generation platforms and winners.
• They also didn’t know that the early market resurgence of 2001 would be crushed by the aftermath of 9/11 and the recession would drag on.

What we see: No one knows today whether the current 2000 replay will continue to enter the full “breakdown” phase.

Important reasons: Generations of businesses and workers who entered the tech industry in the last two decades have no memory of what a major recession would look like or how severe it would be. .

• The industry’s boom of the last two decades has been punctuated by occasional moments of doubt, but none of those setbacks have been total routs.
• This has led young workers to believe that technology is recession-proof and that “going up in numbers” is the natural state of the market.

note: In every recession and recession since 2000, especially the Great Recession and Financial Crisis of 2008-2009, technology has been heaven for investors. But this year, as in 2000, technology companies led the losses.

News promotion: As Axios’ Matt Phillips reported, last week’s slump in earnings hurt big tech stocks, bringing parallels to the dot-com era.

• meta (facebook) reported year-over-year revenue declines for the second consecutive quarter.
• Alphabet (Google) said that advertising sales slowed significantly, resulting in a 27% drop in profit in the last quarter compared to the same period last year, as well as slowing growth in its cloud business.
• Microsoft’s Shares tumbled after announcing that the growth of its Azure cloud business had slowed compared to the same period last year.

• Amazon’s AWS cloud business had record quarterly revenue growth, but its advertising business proved slightly more resilient than some of its peers given its ties to commerce .
• apple As in recent quarters, it was the strongest performer among tech giants.

As a sign of change, The long overheated software developer market appears to be cooling off with job openings down 29% this year.

biggest loser In any recession, they could become technology-made millionaires. They’ve seen their net worth balloon over the years, and now face huge losses on paper.

• Employees who expected stock option compensation, especially those just joining big companies amid the massive hiring surge of the past year, will also face disappointment.

Line spacing: Technology has always been a cyclical industry, and its pendulum tends to overshoot both peaks and troughs.

To the point: A prolonged technology downturn could drive long-term structural change in the technology sector, holding back some of today’s leaders and opening up groundbreaking opportunities for new entrants.

• In 2000, AOL and Yahoo were kings of the online advertising business, and Microsoft was an “evil empire” targeted by the federal antitrust movement.
• There was also a small company called Google that was only two years old. I had almost zero revenue, but I was running a knockout search engine.