When evan spiegel, boss of Snap, wrote in a leaked memo that the social-media company had been “punched in the face hard by 2022’s new economic reality”, he might as well have been describing America’s digital darlings as a whole. After a multi-year bull run, the sector is suffering a sharp correction. The NASDAQ index, home to many consumer-internet firms, has fallen by nearly 30% in the past 12 months; the Dow Jones Industrial Average, made up of less techie firms, is down by less than 10%. Crunchbase, a data provider, estimates that American tech firms have already shed more than 45,000 jobs this year.
Macroeconomics is partly to blame. Soaring inflation and rising mortgage repayments are leading consumers to cut back on discretionary spending—and most digital offerings are discretionary. Even the industry’s trillion-dollar giants have not been spared, despite continuing to rake in handsome profits. Alphabet, Amazon, Apple and Microsoft have collectively lost $2trn in market value over the past 12 months.
