On Tuesday, streaming giant Netflix (NFLX) confirmed it is laying off 150 workers amid slowing demand. That same day, e-commerce giant Wayfair (W) announced a 90-day hiring freeze, citing ‘macro uncertainty.’ The cost-cutting measures coincide with recent stock market declines and the start of a tighter monetary policy cycle.
As the economy now contracts, there will be a lot of companies which survived solely off of reputation and easy money which will begin to fall. In addition, companies like Netflix, which offer non-essential services that customers will cut first will also feel the pain worse than companies which offer essential products.
As a general rule, as times turn harsh, you need to view the populace like an addict being weaned off Heroin. Companies which offered dopamine stimuli like entertainment, or creature comforts for the home, that the public was addicted to before, will become poor investments as people have grow used to going without dopamine, and no longer have the money for it to boot.
Of course the most addictive, dopamine stimuli companies of all will prove to be the social media companies, whose products are noted for having been explicitly designed to elicit dopamine releases in users, to addict them.
