Effect of next recession on FAANG?
I think most people on Blind currently working at FAANG companies were in high school or college in 2008 and don't even know what a recession looks like in the real world. Question: What can we expect to happen at FAANG companies when the next recession comes? Mass layoffs? Hiring freezes? Mandatory PTOs? Loss of free food? Can it get that bad ever in these large almost trillion dollar market cap tech behemoths?
Mandatory PTO? Can you elaborate
Layoffs for sure. Stock prices will plummet, esp AMZN, which is heavily leveraged to retail spending and cloud spend (both of which will contract).
Companies like Netflix will probably see growth at there is a lot less going out and a lot of people I crease spending on cheap forms of entertainment like Netflix subs. Google and fb will be hit pretty bad as consumer spending decreases overall because ad space will be less valuable Apple could go either way but I’m betting on a correction here because they have all but eliminated entry level consumers from buying their products and it’s now solely high end Amazon will reign supreme as they deliver value at a better cost than supermarkets and retail etc with high labor cost and overhead.
Not sure I agree with your Amazon comment. Walmart was one of the best performing stocks during the 2008 recession. People tend to shop locally and look for cheap deals when things are bad. Same with fast food. McDonald's and Burger King did well in the aftermath of the financial crisis if I remember correctly.
If we look at ho amazon has grown and can compete against WM since 2008 though they will be much healthier now.
Companies will reduce the marketing budget significantly which means reduction in advertising profit. They can also reduce spending on cloud swiftly - another blow. Retail will decrease as well. Companies will look into free products instead of paying for premium like office. So all of the tech companies will be impacted. Microsoft laid off big time in 2009 which was the first in company history. People who got laid off will be screwed but people who stick to the company will enjoy huge benefit of buying property in cheap price and getting promoted fast. Any new product development will be endangered and people in core team will survive. Jobs will shift to overseas so companies with more overseas labor will lay off more (eg Microsoft). Google and Facebook don’t have as many people as Microsoft so in a way they will be more secure but due to ad profit decrease, it will be even out.
How do companies generate revenue with free products if ad budgets dramatically shrink?
Good summary, Yololo! onMyWay, exactly! All going after ad revenue, but who will advertise at the same levels when people don't spend. Although counter-intuitive, companies need to increase advertising during downturn to stay relevant with brand image... But most tighten their budgets instead. 5-20% lay-offs were the norm in previous crashes.
One big benefit is any stock you receive during recession while prices are low can balloon and increase TC dramatically.
Free food to free food stamps
Just look up historical stock price trends for Google and Apple.
This won’t be as bad as the last one.
Amazon doesn’t have free food so joke’s on you
FAANG is likely able to weather a recession better than most other companies both in tech and outside of tech.
How so? Better fundamentals or revenue model? Please explain.