As long as the stock goes up after buying at $88, then keep it going to save money.
Meta will survive. It just needs to unload more unnecessary hires and adjust to save more money in the long term.
All caused by the over hiring mania followed by the unsustainable zero interest rate phenomenon and a decade long quantitative easing bubble that had to end.
The zero interest rate and quantitative easing was available to non SV companies, though, and they went through much milder bubbles. There's definitely something specific about tech mania.
And now AI company will hoover up the talent, maybe the monetary and fiscal policies will slow that bubble down a bit.
This just feels like a convenient story. Why would tech companies, who bring in billions in profits each quarter, be so dependent on zero interest loans? If anything, the non-SV companies reducing their ad spend would be a bigger contributor, assuming that has happened?
Ignore Meta, think about how many nonprofitable tech companies were built by basically throwing money at growth the last 10 years. Then think about how early investors were rewarded, not by turning profitable, but by going public or getting acquired. That entire pipeline was built by cheap money.
Because development has high upfront costs. You need to build something before you can collect any money. That means lots of expensive engineers. When building is nearly free (free money now at expense of tomorrow’s cash flow), you build things to sell tomorrow.
Businesses of all sorts get loans when the rate is good. It’s a business cash flow thing.
Look at the SEC filings for all big tech companies. They discuss their billions in debt.
> Why would tech companies, who bring in billions in profits each quarter, be so dependent on zero interest loans?
At least in the case of Facebook and Google, they were getting revenue from the rest of the startups that were dumping cheap money into marketing for growth. When that cheap money dries up for the startups it dries up for GOOG and FB as well.
The ones that bring in billions in profits are less dependent, of course, but even those will carry loans on their books. Why not, if money is free. Each large corporation has essentially an investment bank on the inside.
As long as the stock goes up after buying at $88, then keep it going to save money.
Meta will survive. It just needs to unload more unnecessary hires and adjust to save more money in the long term.
All caused by the over hiring mania followed by the unsustainable zero interest rate phenomenon and a decade long quantitative easing bubble that had to end.