With the growth of the big five tech companies Alphabet, Amazon, Apple, Meta and Microsoft expected to slow in Q3, what impact will this have on cryptocurrencies?
Tech stocks and the cryptocurrency market are currently exhibiting a striking correlation, and negative news for big tech companies could indicate problems with cryptocurrencies.
Correlation Between Traditional Markets And Crypto Shows
Side by side comparison Posted Earlier this month, one user took to Twitter to demonstrate the growing ties between traditional markets and cryptocurrencies. Since early 2021, traditional markets and cryptocurrencies share common trend lines and spikes.
This allows the pseudonym “jumbo‘ on Twitter, concluding that Wall Street will ‘handle’ Bitcoin And crypto is just an extension of the tech sector. ”
Whether or not individual investors reach the same conclusions, the correlation means that the success or failure of technology companies remains of strong interest to crypto sector investors.
Each of the “Big 5” tech companies will provide updates to investors this week.Alphabet and Microsoft first time Meta to release third-quarter numbers at market close on Tuesday, Meta to release numbers at market close on Wednesday, Apple and Amazon completion Set when they release their numbers at the end of the market on Thursday.
Can Crypto Snap be used with Snap?
last Friday, snap (Snapchat’s parent company) posted lower-than-expected results, with revenue up just 6% to $1.13 billion and net loss up 400% from $72 million to $360 million. The numbers sent the company’s stock price down 20% in the hours after the announcement.
If Snap’s predicament were repeated across the tech sector, the results could be disastrous for both tech and crypto. There is good reason to believe that it is not associated with
Snap recently reorganized and laid off 6,500 staff at a cost of $150 million. This one-off cost weighs heavily on the company, suggesting that results may be outliers rather than the norm. The focus is on advertising.
Technology companies expected to slow down
Technology and cryptocurrencies will become increasingly linked after 2021, which may be partly a result of broader economic conditions. It shows that few markets are immune to adverse conditions.
reported that financial times upon Mondaygrowth of the top five technology companies is expected to slow to about 10% this quarter from 29% in the same period last year.
If the Big 5 release numbers broadly in line with these expectations, the impact on the market could be minimal. If the result differs significantly from the forecast, the price action can be more pronounced.
Of the Big 5, perhaps the meta 1 Investors may be most concerned. Since rebranding from Facebook, the company has invested heavily in Metaverse and his Web3 technology. At the same time, the company’s core business is under increasing pressure.
Like Snap, Meta relies heavily on advertising revenue, which tends to be the first cost-cutting company makes during difficult economic times. Apple changes Clause It also makes targeting ads more difficult for the company.
Meta is set to announce a 5% drop in revenue in the third quarter, following a 1% drop in the previous quarter.
Now, at least one of the major shareholders is demanding a change in the company’s strategy by drastically cutting spending on the metaverse and cutting headcount.
Meta encourages cost cutting
in the open letter For Meta, Brad Gerstner, chairman and CEO of Altimeter Capital, has asked the company to cut labor costs by 20%. Gerstner also urged Mark Zuckerberg to focus more on artificial intelligence (AI) than the metaverse and cut spending on the latter.
Gerstner said Meta currently needs to limit its Metaverse-related spending to $5 billion annually. Expressing the general anxieties of traditional investors, Gerstner said that “meta needs to regain its mojo” and “get fit and focused”. Gerstner continued, “People are even confused about what the metaverse means.”
The investment chief indicated that the Metaverse is a long-term project and may not come to fruition for at least 10 years. Current annual spending levels are over $10 billion, and these spending levels are making investors uneasy.
“An estimated $100 billion+ investment in an unknown future is huge and terrifying even by Silicon Valley standards,” Gerstner said.
Gerstner may not get his wish, but there are some signs that Meta intends to tighten its belts a bit. last monthMark Zuckerberg has confirmed that Meta will end 2023 as a “slightly smaller” organization following a hiring freeze.
That small concession could be flimsy for a Wall Street shark chasing more immediate gains.
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