The state of the tech sector can only be summarised in one word: flatlining.
During the '90s and until the well-documented demise of the greedy tech industry, the Dot-com bubble was the equivalent of The Great Depression for the tech sector, which saw seemingly excessive and lavish tech companies go off a cliff.
Many people lost their livelihoods during the Dot-com bust of the year 2000. The turn of the millennia was marked by widespread layoffs and a bad time for investors.
To quote Wikipedia for a moment:
In March 2000, the Nasdaq Composite stock market index rose 400%, only to fall 78% from its peak by October 2002, giving up all its gains during the bubble
Low interest rates in 1998–99 facilitated an increase in startup companies. Although a number of these new entrepreneurs had realistic plans and administrative ability, most of them lacked these characteristics but were able to sell their ideas to investors because of the novelty of the dot-com concept.
Ouch.
Does any of this sound familiar to you? Low interest rates fuelled an increase in startups, soliciting cheap capital from investors looking to ride the trend they thought would never end—the birth of the internet.
If you've been paying attention to tech companies' stock prices (not necessarily startups like the '90s dot-com bubble), you would see a similar trend. Off the back of pandemic-fuelled low-interest rates, many tech companies saw huge levels of growth because we were all stuck in our homes for the better part of two years.
Want to see a picture of something painful? The Peloton share price.
In December 2020, the Peloton share price peaked at $162.72. It stayed at a reasonable price (considering where it was before the pandemic) until you can visibly see countries begin to lift COVID restrictions towards the middle end of 2021. The current price is $9.39, a drop of 62.8% in value. Ouch.
Over at the community dumpster fire Meta, it's a similar story with a collapse of 75% since September 2021.
Once again, these aren't startups. They are fully fledged large market cap companies that have had a good ride for over a decade. However, it is worth pointing out that Meta made $35.13 billion in 2021.
And, then you have Dot-com bubble phoenix Amazon in a similar situation, down 48%. Not quite rush for the exit doors; there's an uncontrollable warehouse like over at Meta HQ, but still not ideal for a company considered the God of e-commerce.
If you can't handle the loss porn, then avert your eyes now before I show you how far Australian tech darling Atlassian has fallen. Down a whopping 71.89%, which is not far off Meta's catastrophic fall.
The thing with Atlassian is they're an unprofitable company. Despite making software used by a lot of companies (Jira, most notably), they still can't turn a profit. By employee count, they're one of the largest tech companies in Australia, but the large workforce doesn't seem to equate to profit.
Are we headed in the same direction? Well, sort of. It's hard to look at just a handful of tech stock prices and not see parallels between 2022 and the 2000 Dot-com bubble. There will inevitably be casualties come 2023. While I doubt you'll see Amazon or Atlassian fall, given their market caps are still quite large, smaller companies might not be so lucky.
Companies like Google have historically always been in a constant state of hiring. We are already witnessing companies like Google institute hiring freezes because of global economic concerns around inflation and talk of recession. The fact that Google is slowing down is a canary in the coal mine, a gas leak, and the canary is dying.
It's no longer a case of if but when a recession is coming. The question people should be asking is, "How bad is the recession going to be?" well, if the GFC of 2008 were about a 6 out of 10, the next financial crisis would at least be an 8.
We are witnessing the birth of Web 0, tech companies with zero prospects for the foreseeable future. Honestly, the whole tech industry needed a dose of reality anyway. People might finally see that blockchain-based applications are a better way to go.