Meta, Google, Amazon… The dark week of GAFAM

At the end of October, Tech companies, and in particular large groups, experienced a dark week. The valuation of all GAFAMs has fallen, so much so that the Financial Times estimates the drop at nearly $800 billion. In question ? A combination of factors related to the slowing economy and rising costs for many organizations.

The world of Tech is bad. For several months, many companies have laid off all or part of their workforce. Most of the time, these are startups or unicorns. This is mainly due to the fact that these organizations spend lavishly, are not necessarily profitable, and rely on fundraising to bring in the money necessary to keep the accounts afloat. Problem ? Investors are much more cautious than before and less easily put money on the table. Today, they ensure above all the profitability of a company before investing.

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Amazon, Google and Microsoft in turmoil?

The first to suffer the horrors of this black week is Amazon. Indeed, the e-commerce giant is unlikely to meet the targets set by analysts who previously estimated that the company would generate $ 155 billion in profits in the last quarter of 2022. This is the most strategic period for Amazon. , since it includes Black Friday, the second Prime Day (which took place in October), as well as the holiday season.

Today, analysts estimate that Amazon should rather reach 140 billion dollars. This announcement is coupled with the fact that revenues from the cloud (and therefore from the AWS entity, Amazon Web Services) are slipping, with customers having to cut costs massively as well. It was enough for the valuation of the e-commerce giant to drop. Amazon’s stock lost almost 9% of its value in a month and fell 14% in just 5 days.

Microsoft and Google are facing the same issues: the rise in the cost of energy has a direct impact on their business since data centers are very energy-intensive. In addition, customers are also obliged to make savings since they also face the increase in the price of energy and raw materials. Thus, advertising and cloud services are less successful.

Between Tuesday and Wednesday, Microsoft’s stock lost 7.74% of its value. Despite an improvement on Friday, October 28, the action of the firm created by Bill Gates has lost almost 18% of its value over the past 6 months. On the Google side, it’s 7.5% drop on the NASDAQ on Black Tuesday, October 25. On the other hand, it is over the long term that the fall in valuation is more impressive. Since the beginning of the calendar year, or January 3 for the New York Stock Exchange, the company has lost 33% of its value.

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Meta’s stock plummets, Mark Zuckerberg’s fortune suffers

The steepest fall is attributed to Meta. Indeed, the group formerly known as Facebook has suffered greatly from the strategy of its founder, Mark Zuckerberg, which consists of investing heavily in the metaverse. It must be said that 10 months after the launch of Horizon Worlds, Meta’s metaverse, some rooms remain desperately empty. As mentioned by Thomas Pontiroli, journalist at Les Échos, the company was counting on 500,000 monthly users. Today there are around 200,000.

The Verge highlights the disastrous numbers of the metaverse of Meta, which is only accessible through the band’s virtual reality headset: Quest. Last quarter, the Reality Labs division lost nearly $3.7 billion. Over the year, it’s almost 10 billion losses for this department, while the Quest 2 helmet has seen its price climb by $100 at the same time, a very aggressive price that puts off many customers.

In total, Meta will have planned to spend 10 billion dollars per year, for 10 years, on this project which, for the moment, does not attract anyone. However, the group intends to make Horizon Worlds available on PC, Mac, tablets and smartphones by the end of 2022, specifying however that the experience will be greatly reduced.

These phenomena are added to several other economic factors that are hurting Meta’s business. While Facebook is losing audience and no longer appealing to TikTok, Instagram is struggling to renew itself. And all this without forgetting the various scandals that the firm has faced, like Cambridge Analytica.

The fortune of Mark Zuckerberg being directly correlated to the good financial health of Meta, it also suffers the pangs of the risky decisions of its leader. Since the start of the year, Meta’s stock has lost 70% of its value. The company is now worth $266 billion. mark zuckerberg came out of the top 10 richest people in the world. Currently at 26e place, his wealth is estimated at 38.2 billion dollars. He lost $87.3 billion in one year.

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Apple, only GAFAM to resist

Smartphone manufacturers are also going through tough times. Indeed, several factors are pushing customers to rethink their phone purchases: greater durability of products on the market, ecological awareness, aggressive price increases, insecurity about raw materials… Results, manufacturers’ revenues are all down. , with the exception of Apple, which saw its turnover increase by 2%.

Nevertheless, all is not rosy in the land of the apple. Indeed, iPhone 14 orders are slowing down. The firm had planned to accelerate production to deliver a large quantity of smartphones. At the end of September, just a few days after the release of the new model, Apple decided to cancel the order placed with its manufacturers.

On the side of the manufacturers, problems are also emerging: increase in the price of energy, shortage of electronic components… Some devices are becoming complex to buy, this is particularly the case with the PlayStation 5. Apple is doing relatively well despite everything. . During Black Tuesday, the apple brand lost only 1% of its value. Since January, however, Apple shares have fallen 14%.

Layoffs to be expected at GAFAM?

This is the question everyone is asking. Indeed, Google has already paused its recruitment to carry out a headcount. It must be said that large companies growing rapidly, they hired with a vengeance. Today, they realize that some people are not necessarily in the right position or quite simply that certain recruitments are not necessary.

In France, several startups are beginning to ask questions about hiring, faced with the difficulty of raising funds. In the United States, the trend is more towards layoffs. In total, in Tech, nearly 45,000 people lost their jobs in 2022 alone.

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