First all the bs with Twitter and Elon, then Reddit having an exodus to Lemmy (not complaining lol), then Twitch. Are we like, in an alternate self healing dimension or something?

  • Kevin Herrera@beehaw.org
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    1 year ago

    From everything I have observed, businesses are hunkering down for a recession in the next fiscal year. It explains the lay offs, the penny pinching, and puzzling decisions that look like business suicide.

    For services that are free for users, advertising revenue and investment fund raisers are the only thing keeping them afloat. With banks like SVB getting seized by the FDIC, it’s starting to scare investors. Advertisers are seeing the writing on the wall that people will stop spending as much as they used to. We are also probably seeing jacked up pricing across the board because businesses are taking what they can before it’s gone.

    So what’s left? Squeeze users for money. Additionally, shed users that actually cost them money and these tend to be power users. The question, which everyone seems to be assuming is a foregone conclusion, is if this shedding strategy will end up killing the service. In reality, we don’t know but the idealists would sure feel good if someone else ate their market share.

    I’m just glad that federation is picking up steam in the social media space.

      • hglman@lemmy.world
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        1 year ago

        There is a psychology at work in layoffs—ownership forces management to choose to hurt people to give more to ownership. Like paying a blood tribute to the king, but dumber.

    • MyNameIsFred@beehaw.org
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      1 year ago

      I agree with most of what you said. I would say classifying SVB as a seizure is probably not accurate. The FDIC only came in when it was clear SVB was going to fold and in fact insured far more than the 250k per account guaranteed. Mainly to try and stem a run on midsize banks because

      1. Many companies had large holdings, undiversified in these banks

      2. The banks were borderline negligent with how they handled those deposits, sticking them all in “safe” government bonds that ruins liquidity.

      Once the interest rate on the bonds was lower than the base borrowing rate, no one would buy the bonds instead of just buying new bonds with a much higher guaranteed return.

      So, given that, I would say the FDIC instead bailed out the banks. Something they would never do for you or I, or even a business with similar valuation as any of the banks customers.

    • Otakeb@lemmy.world
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      1 year ago

      Also what hasn’t been touched on very much in this thread is the increase in interest rates from the Federal Reserve. The money hose has shut off and expansionary business policy won’t work for the foreseeable future even disregarding a recession. All these internet companies have developed and grown in an essentially 0% interest rate environment that rewarded growth beyond all else. With rates increasing, investment in risky companies that may or may not grow is becoming a less attractive option when you can just buy a 5% bond and so I bet a lot of these non-profitable, growth-focused web companies are seeing liquidity dry up and are having to reach profitability to avoid bankruptcy since servicing new debt in this current interest environment is basically impossible without solid cashflow and a clear corporate vision.

      This is leading to all these companies suddenly raising prices, cutting staff, choking competition, and cheaping out to try and break even instead of grow. It’s a paradigm shift.

      • Rickety Thudds@lemmy.ca
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        1 year ago

        Crazy to hear people talking about this stuff out in the wild. Feels like I’m on superstonk, only place I tend to hear anyone connecting these dots.

        • Otakeb@lemmy.world
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          1 year ago

          Speaking of superstonk, is there a good superstonk or wsb personalfinance lemmy community? I am subbed to the beehaw finance community, but it’s really not a tube yet and seems to be a bit more economics leaning than pure personal finance or investing.

          The subs I spend a lot of time on were FIRE, financialindependence, wsb, and personal finance and I miss them lol.

          • Rickety Thudds@lemmy.ca
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            1 year ago

            The Canadian GameStop folks have a community on lemmy.ca, but we are still very few.

            I would like to join a federated wsb community too, if there’s anyone with any integrity willing to run it impartially. Anyone running such a place has a conflict of interest imo, the tendency is moral hazard. At least with single stock communities you know their motive.