Is the root cause of this really just overhiring during the pandemic? Or is there something else at play here?
source?
This is speculation, so would love any corrections or counter points.
read enough doomsday social media material and you'll be convinced you should lock your money into treasuries at 4% instead of equities all together (any stock, including index/mutual funds)
The stock market is a secondary market. You or me buying shares doesn't effect Amazon at all. They don't get a penny of your money when you buy shares
Look at the chart you linked to - the fed raised rates from effectively 0 to ~2.4% over 3+ years from 2016-2019. That has absolutely nothing in common with what's happening right now, where the fed went from 0.3 in April to ~3% today.
It’s actually the fastest fed tightening ever, from a percentage change perspective.
Weren’t many 100x sales companies in 2015. Even after the recent carnage there are still many 10-40x sales companies, which is pretty much unjustifiable with a 4.5% risk free rate
so you are saying from a valuation perspective, we have more room to fall?
Things like DASH which have high sales multiples relative to what a realistic margin is for them long term. Or software stocks like NET that are still over 10x sales, without a sufficiently commensurate growth rate to justify it.
A company with a 20x PE implies a 5% yield this year. I can get 5% on a AAA bond effectively risk free, or 4.5% on a treasury absolutely risk free. There is close to 0 fundamental justification for a lot of tech stocks still.
CMG with 50 PE implies a 2% yield. Why? What logic is there to justify this? You can invent some story about 20 years from now, or I can take a guaranteed return that’s many times higher today.
Some stocks are very fairly valued though, valuations are all over the place right now and not consistent within sectors. Should Apple really have twice the valuation multiple as Google? Not in my opinion
If tech companies miss earnings again when they report for Q4, do they have another 10-20% drop left in them again?
Pretty realistic if the recession gets bad.
Current estimates for the S&P predict earnings growth even though there’s a very clear recession on the horizon, likely deep.
Anyway, lots of cheap stocks out there now if you avoid the index. Still too many absurdly overvalued constituents like Chipotle and Costco (40-50x trailing PE, just why)
My biggest concern is, while I agree with you that S&P 2023 EPS TTM could end up being $200, because we have not yet seen this reflected in estimates (Yardeni earnings forecasts shows $235 as an estimate), we have more room to fall before the expectation (let alone the reality) of that is priced in.
$235 Yarendi expectation -> $200 your expectation is a 15% difference. That means analysts (and consequentially the market pricing in those analysts expectations) are "incorrectly" estimating earnings 15% higher than they might be in your opinion.
Scary times.
i'm counting for at least another 20% across the board when earnings miss everywhere.
> We still intend to hire a meaningful number of people in 2023
Am I missing something, or are these contradictory?
Who knows? It's HR PR, it means whatever they want it to mean.
You never have a job until you're in the chair, sitting down coding... or at least that's my bar lol.
I'll miss responding to those for a while.
