Tech firms have had it ‘too good for too long’: Forager
There is a “huge adjustment” coming for Silicon Valley as share price falls mean staff are unlikely to receive the same volume of remuneration and companies will attract new investors with a takeover agenda.
Technology stocks have fallen in the past few months with Apple down 17%, Amazon down 32%, Meta down 42% and Netflix down 67%.
In a webinar, Gareth Brown, senior analyst at Forager, said it was likely there would be a re-appraisal of Silicon Valley technology firms coming up which would be driven by the shareholders.
“There’s a lot of talk about whether the market in Silicon Valley is similar to 2000. Obviously there’s some parallels, [but] I’m quite sympathetic to the idea that this is different. These are real businesses now that generate a lot of money, not like back in the early days of the dotcom boom. I think there’s a huge adjustment coming for the staff in Silicon Valley. They’ve had it too good for too long.
“I think there will ultimately be a reappraisal here, it needs to come from the shareholders. The shareholders need to sit up and say, this is no longer acceptable.”
Steve Johnson, Forager chief investment officer, added there was a particular drive by different types of investor who were driving a takeover agenda such as Elon Musk’s bid for Twitter earlier this month which was changing how the firm was run.
He said: “The share prices get low enough and you start attracting a different type of investor that is coming in with a specific agenda here to change the way it’s going on.”
However, Brown countered that were still technology firms where the share price had fallen but no different type of takeover investor had appeared because they couldn’t work out the firm’s intrinsic value.
Forager held a stake in Twitter and previously said it was disappointed by the move by Musk to purchase the firm.
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Laura Dew
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