21 Aug Tech Marketing Valuations
In recent weeks there has been a lot of mixed news for the big names in the tech industry. In a world economy which has started to get back on its feet, the setbacks in Greece and China’s insistence on lowering their currency value have not restored full confidence in the markets but some economies are starting to see growth. However, some Technology business’ relationships with the markets seems to be very fickle currently.
Apple, Twitter, and HTC have all been subject to the markets ruthlessness in recent weeks, and some argue Google’s transition to Alphabet is with one eye on the financial markets.
So why does tech seemingly get such a rough ride?
If we think back to the dotcom bubble and crash at the turn of the millennia, this may account for certain scepticism. It’s arguable that Apple’s current cash rich position should hold some weight with the markets. In recent weeks we have seen Apple’s share price drop significantly when the markets reacted to their figures being below what analysts hoped for, or predicted. The revenue is still very high and iPhone sales were through the roof. This may have been the reason for Apple’s reluctance to share Watch sales figures. Either way they are a pretty solid company and the markets reaction could be viewed as a little extreme.
Twitter has recently been dealt a blow when the major universities who invested in them in the early stages sold their stakes recently, the reason their growth had slowed 302 million to 304 million users. At some stage Facebook and Twitter’s growth will plateau, every media finds its niche. Some would suggest Twitter’s real challenge is staying relevant and keeping their audiences engaged, which will in turn provide better results for its advertisers. As a regular user, its fair to say Twitter don’t stand still with updates and improvements.
We’ve also been watching HTC’s value hit rock bottom at the start of the week, with journalists stating its device strategy is wrong, and the mobile markets ruthlessness was also mooted as a factor. HTC are not backed by a larger manufacturer of other high margin tech items such as Samsung or Sony are, so arguably it was always going to struggle.
If you take the stories about Twitter, HTC, and Apple on Face value and consider the valuations of Instagram,Waze and Snapchat you start to empathise with these brands and feel there is a massive disparity in the tech Sector. Ultimately scratching below the surface of Apple’s fall can be linked to uncertainty in the Chinese smartphone market. Twitter’s change was preceded by bullish increases the quarter before. Often what the Tech sector lacks is perspective. This is the key, what is reported is often based on headline factors such as the Apple watch and its the other reasons under the surface that are often the real reasons for the Markets reaction.