Displaying items by tag: tech

(San Francisco)

Big tech companies have had an incredible decade, but that may be about to go the way of Wall Street, and not the post-Glass Steagall Wall Street, more like post Dodd-Frank Wall Street. Regulatory inquiries and fines against Big Tech are starting to pile up, and while the actual fines are tolerable given the companies’ massive profitability, the real change that could hurt them is structural. All the regulatory inquiries have forced tech companies to load up on compliance and related staff—Facebook’s employee count has surged from 6,000 six years ago to 35,000 today. Margins at Google have fallen considerably too. All of that is happening at the same time as top line growth is inevitably slowing because of the size of the businesses.

FINSUM: We think Big Tech might be at the very beginning of the end of its golden age.

(San Francisco)

Facebook announced this week that it would pay a $5 bn fine to settle a Free Trade Commission investigation into privacy violations. The exact same day, Facebook announced that the FTC had launched another probe, this one perhaps more worrying. The new probe is a formal antitrust investigation into Facebook. The company disclosed the investigation alongside its quarterly results yesterday.

FINSUM: So Facebook and big tech not only have the DOJ on them now, but now the FTC too. End of the golden age of the FAANGs?

(San Francisco)

There have been a lot of worries about the tech sector this year. Besides valuation, the big fear has been the threat of regulation. Well, those anxieties are proving to be correct as the Department of Justice has just officially announced that it has opened a probe to figure out whether the tech sector is smothering competition. The broad antitrust investigation did not name companies in particular, but said it would focus on “search, social media and some retail services online”.

FINSUM: This is quite a worrying development, but it is hard to say how exactly it may play out. There does seem to be popular momentum behind further regulating big tech, which means lawmakers may be more emboldened.

(San Francisco)

A year ago you were a considered a maniac if you didn’t have your portfolio loaded with FAANGs and other tech stocks. What a difference a year makes! Tech stocks are now largely out of favor after a rough year that has underperformed the S&P. There are a lot of fears of regulatory scrutiny and slowing financial performance. The tide has turned so much against the stocks that it is fair to call them a contrarian bet.

FINSUM: It sounds quite ridiculous to call some of the world’s most popular stocks over the last few years “contrarian”, but it seems true at this point. It appears it might be a good time to buy, though regulatory fears may prove legitimate.

(New York)

A year ago, the FAANGs were flying high. In the previous twelve months they had risen 52% against the market’s 13% growth. The group of tech stocks has since suffered, underperforming the S&P 500 in the last year. In fact, a group of very conservative stocks have been leading the way. Call them the “WPPCK” (not as catchy, we know), which is comprised of Walmart, Procter & Gamble, Pepsico, Costco, and Coca-Cola. This group has risen 27.1% in the last year versus the S&P 500’s 7.2% gain and the FAANGs’ 5.7%.

FINSUM: It is hard to imagine a less flashy group of stocks than these, but they have been strong and steady, which seems like a good formula for this unpredictable market.