What are price targets and how to use them

Traders work on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., November 11, 2022. 

Andrew Kelly | Reuters

I’m a (very happy) Investing Club member and would love to see a discussion of analysts’ price targets. Here are my three most pressing questions:

  • How are PTs arrived at? And why do they vary, sometimes widely, from analyst to analyst?
  • Do the analysts actually expect the stock to reach those targets?
  • Most important, as investors, how should we understand and utilize PTs as we manage our own portfolios and make buy/sell/hold decisions? 

Thanks so much. — Robbi

How the industry lost $7.4 trillion in one year

Pedestrians walk past the NASDAQ MarketSite in New York’s Times Square.

Eric Thayer | Reuters

It seems like an eternity ago, but it’s just been a year.

At this time in 2021, the Nasdaq Composite had just peaked, doubling since the early days of the pandemic. Rivian’s blockbuster IPO was the latest in a record year for new issues. Hiring was booming and tech employees were frolicking in the high value of their stock options.

Twelve months later, the landscape is markedly different.

Not one of the 15 most valuable U.S. tech companies has generated positive returns in 2021. Microsoft has shed roughly $700 billion in market cap. Meta’s market cap has contracted by over 70% from its highs, wiping out over $600 billion in value this year.

In total, investors have lost roughly $7.4 trillion, based on the 12-month drop in the Nasdaq.

Interest rate hikes have choked off access to easy capital, and soaring inflation has made all those companies promising future profit a lot less valuable today. Cloud stocks have cratered alongside crypto.

There’s plenty of pain to go around. Companies across the industry are cutting costs, freezing new hires, and laying off staff. Employees who joined those hyped pre-IPO companies and took much of their compensation in the form of stock options are now deep underwater and can only hope for a future rebound.

IPOs this year slowed to a trickle after banner years in 2020 and 2021, when companies pushed through the pandemic and took advantage of an emerging world of remote work and play and an economy flush with government-backed funds. Private market darlings that raised billions in public offerings, swelling the coffers of investment banks and venture firms, saw their valuations marked down. And then down some more.

Rivian has fallen more than 80% from its peak after reaching a stratospheric market cap of over $150 billion. The Renaissance IPO ETF, a basket of newly listed U.S. companies, is down 57% over the past year.

Tech executives by the handful have come forward to admit that they were wrong.

The Covid-19 bump didn’t, in fact, change forever how we work, play, shop and learn. Hiring and investing as if we’d forever be convening happy hours on video, working out in our living room and avoiding airplanes, malls and indoor dining was — as it turns out — a bad bet.

Add it up and, for the first time in nearly two decades, the Nasdaq is on the cusp of losing to the S&P 500 in consecutive years. The last time it happened the tech-heavy Nasdaq was at the tail end of an extended stretch of underperformance that began with the bursting of the dot-com bubble. Between 2000 and 2006, the Nasdaq only beat the S&P 500 once.

Is technology headed for the same reality check today? It would be foolish to count out Silicon Valley or the many attempted replicas that have popped up across the globe in recent years. But are there reasons to question the magnitude of the industry’s misfire?

Perhaps that depends on how much you trust Mark Zuckerberg.

Meta’s no good, very bad, year

Meta Reality Labs VP: Company's building a brand new computing platform and it's not cheap

The big and immediate problem is Apple, which updated its privacy policy in iOS in a way that makes it harder for Facebook and others to target users with ads.

With its stock down by two-thirds and the company on the verge of a third straight quarter of declining revenue, Meta said earlier this month it’s laying off 13% of its workforce, or 11,000 employees, its first large-scale reduction ever.

“I got this wrong, and I take responsibility for that,” Zuckerberg said.

Mammoth spending on staff is nothing new for Silicon Valley, and Zuckerberg was in good company on that front.

Software engineers had long been able to count on outsized compensation packages from major players, led by Google. In the war for talent and the free flow of capital, tech pay reached new heights.

Recruiters at Amazon could throw more than $700,000 at a qualified engineer or project manager. At gaming company Roblox, a top-level engineer could make $1.2 million, according to Levels.fyi. Productivity software firm Asana, which held its stock market debut in 2020, has never turned a profit but offered engineers starting salaries of up to $198,000, according to H1-B visa data.

Fast forward to the last quarter of 2022, and those halcyon days are a distant memory.

Layoffs at Cisco, Meta, Amazon and Twitter have totaled nearly 29,000 workers, according to data collected by the website Layoffs.fyi. Across the tech industry, the cuts add up to over 130,000 workers. HP announced this week it’s eliminating 4,000 to 6,000 jobs over the next three years.

For many investors, it was just a matter of time.

“It is a poorly kept secret in Silicon Valley that companies ranging from Google to Meta to Twitter to Uber could achieve similar levels of revenue with far fewer people,” Brad Gerstner, a tech investor at Altimeter Capital, wrote last month.

Gerstner’s letter was specifically targeted at Zuckerberg, urging him to slash spending, but he was perfectly willing to apply the criticism more broadly.

“I would take it a step further and argue that these incredible companies would run even better and more efficiently without the layers and lethargy that comes with this extreme rate of employee expansion,” Gerstner wrote.

Microsoft's president responds to big tech layoffs

Activist investor TCI Fund Management echoed that sentiment in a letter to Google CEO Sundar Pichai, whose company just recorded its slowest growth rate for any quarter since 2013, other than one period during the pandemic.

“Our conversations with former executives suggest that the business could be operated more effectively with significantly fewer employees,” the letter read. As CNBC reported this week, Google employees are growing worried that layoffs could be coming.

SPAC frenzy

Remember SPACs?

Those special purpose acquisition companies, or blank-check entities, created so they could go find tech startups to buy and turn public were a phenomenon of 2020 and 2021. Investment banks were eager to underwrite them, and investors jumped in with new pools of capital.

Venture capitalists are cashing in on clean tech, says VC Vinod Khosla

“You just don’t know what it’s going to be like going forward,” EY venture capital leader Jeff Grabow told CNBC. “VCs are rationalizing their portfolio and supporting those that still clear the hurdle.”

The word profit gets thrown around a lot more these days than in recent years. That’s because companies can’t count on venture investors to subsidize their growth and public markets are no longer paying up for high-growth, high-burn names. The forward revenue multiple for top cloud companies is now just over 10, down from a peak of 40, 50 or even higher for some companies at the height in 2021.

The trickle down has made it impossible for many companies to go public without a massive markdown to their private valuation. A slowing IPO market informs how earlier-stage investors behave, said David Golden, managing partner at Revolution Ventures in San Francisco.

“When the IPO market becomes more constricted, that circumscribes one’s ability to find liquidity through the public market,” said Golden, who previously ran telecom, media and tech banking at JPMorgan. “Most early-stage investors aren’t counting on an IPO exit. The odds against it are so high, particularly compared against an M&A exit.”

There have been just 173 IPOs in the U.S. this year, compared with 961 at the same point in 2021. In the VC world, there haven’t been any deals of note.

“We’re reverting to the mean,” Golden said.

An average year might see 100 to 200 U.S. IPOs, according to FactSet research. Data compiled by Jay Ritter, an IPO expert and finance professor at the University of Florida, shows there were 123 tech IPOs last year, compared with an average of 38 a year between 2010 and 2020.

Buy now, pay never

There’s no better example of the intersection between venture capital and consumer spending than the industry known as buy now, pay later.

Companies such as Affirm, Afterpay (acquired by Block, formerly Square) and Sweden’s Klarna took advantage of low interest rates and pandemic-fueled discretionary incomes to put high-end purchases, such as Peloton exercise bikes, within reach of nearly every consumer.

Affirm went public in January 2021 and peaked at over $168 some 10 months later. Affirm grew rapidly in the early days of the Covid-19 pandemic, as brands and retailers raced to make it easier for consumers to buy online.

By November of last year, buy now, pay later was everywhere, from Amazon to Urban Outfitters‘ Anthropologie. Customers had excess savings in the trillions. Default rates remained low — Affirm was recording a net charge-off rate of around 5%.

Affirm has fallen 92% from its high. Charge-offs peaked over the summer at nearly 12%. Inflation paired with higher interest rates muted formerly buoyant consumers. Klarna, which is privately held, saw its valuation slashed by 85% in a July financing round, from $45.6 billion to $6.7 billion.

The road ahead

That’s all before we get to Elon Musk.

The world’s richest person — even after an almost 50% slide in the value of Tesla — is now the owner of Twitter following an on-again, off-again, on-again drama that lasted six months and was about to land in court.

Musk swiftly fired half of Twitter’s workforce and then welcomed former President Donald Trump back onto the platform after running an informal poll. Many advertisers have fled.

And corporate governance is back on the docket after this month’s sudden collapse of cryptocurrency exchange FTX, which managed to grow to a $32 billion valuation with no board of directors or finance chief. Top-shelf firms such as Sequoia, BlackRock and Tiger Global saw their investments wiped out overnight.

“We are in the business of taking risk,” Sequoia wrote in a letter to limited partners, informing them that the firm was marking its FTX investment of over $210 million down to zero. “Some investments will surprise to the upside, and some will surprise to the downside.”

Even with the crypto meltdown, mounting layoffs and the overall market turmoil, it’s not all doom and gloom a year after the market peak.

Golden points to optimism out of Washington, D.C., where President Joe Biden’s Inflation Reduction Act and the Chips and Science Act will lead to investments in key areas in tech in the coming year.

Funds from those bills start flowing in January. Intel, Micron and Taiwan Semiconductor Manufacturing Company have already announced expansions in the U.S. Additionally, Golden anticipates growth in health care, clean water and energy, and broadband in 2023.

“All of us are a little optimistic about that,” Golden said, “despite the macro headwinds.”

WATCH: There’s more pain ahead for tech

There's more pain ahead for tech, warns Bernstein's Dan Suzuki

Klarna CEO says layoffs timing was ‘lucky,’ eyes 2023 profitability

Sebastian Siemiatkowski, CEO of Klarna, speaking at a fintech event in London on Monday, April 4, 2022.

Chris Ratcliffe | Bloomberg via Getty Images

HELSINKI, Finland — Klarna will become profitable again by next year after making deep cuts to its workforce, CEO Sebastian Siemiatkowski told CNBC.

Klarna lost more than $580 million in the first six months of 2022 as the buy now, pay later giant burned through cash to accelerate its expansion in key growth markets like the U.S. and Britain.

Under pressure from investors to slim down its operations, the company reduced headcount by about 10% in May. Klarna had hired hundreds of new employees over the course of 2020 and 2021 to capitalize on growth fueled by the effects of Covid-19.

“We’re going to return to profitability” by the summer of next year, Siemiatkowski told CNBC in an interview on the sidelines of the Slush technology conference last week. “We should be back to profitability on a month-by-month basis, not necessarily on an annual basis.”

The Stockholm-based startup saw 85% erased from its market value in a so-called “down round” earlier this year, taking the company’s valuation down from $46 billion to $6.7 billion, as investor sentiment surrounding tech shifted over fears of a higher interest rate environment.

Buy now, pay later firms, which allow shoppers to defer payments to a later date or pay over installments, have been particularly impacted by souring investor sentiment.

Siemiatkowski said the firm’s depressed valuation reflected a broader “correction” in fintech. In the public markets, PayPal has seen its shares slump more than 70% since reaching an all-time high in July 2021.

Ahead of the curve?

Siemiatkowski said the timing of the job cuts in May was fortunate for Klarna and its employees. Many workers would have been unable to find new jobs today, he added, as the likes of Meta and Amazon have laid off thousands and tech remains a competitive field.

“To some degree, all of us were lucky that we took that decision in May because, as we’ve been tracking the people who left Klarna behind, basically almost everyone got a job,” Siemiatkowski said.

“If we would have done that today, that probably unfortunately would not have been the case.”

His comments may raise eyebrows for former employees, some of whom reportedly said the layoffs were abrupt, unexpected and messily communicated. Klarna informed staff of the redundancies in a pre-recorded video message. Siemiatkowski also shared a list of the names of employees who were let go publicly on social media, sparking privacy concerns.

While Siemiatkowski admitted to making some “mistakes” around moves to keep costs under control, he stressed that he believed it was the right decision.

“I think to some degree actually, Klarna was ahead of the curve,” he said. “If you look at it now, there’s been tons of people who’ve been making similar decisions.”

“I think it’s a good sign that we faced reality, that we recognized what was going on, and that we took those decisions,” he added.

Siemiatkowski said there was some “insanity” caused by the competition among tech firms to attract the best talent. The job market was largely employee-driven, particularly in tech, as employers struggled to fill vacancies.

That trend is under threat now, however, as the threat of a looming recession has prompted employers to tighten their belts.

Earlier this month, Meta, Twitter and Amazon all announced they would lay off thousands of workers. Meta let go 11,000 of its employees, while Amazon parted with 10,000 workers. Under the reign of its new owner Elon Musk, Twitter laid off about half of its workforce.

The tech sector has been under pressure broadly amid rising interest rates, high inflation and the prospect of a global economic downturn.

But the mass layoff trend has been criticized by others in the industry. Julian Teicke, CEO of digital insurance startup Wefox, decried the wave of layoffs, telling CNBC in an interview that he’s “disgusted” by the disregard of some companies for their employees.

“I believe that CEOs have to do everything in their power to protect their employees,” he said in a separate interview at Slush. “I haven’t seen that in the tech industry. And I’m disgusted by that.”

Signs that ‘turnover contagion’ might be brewing at your workplace

From Meta and Twitter, to Salesforce and Amazon, the tech industry has been plagued by a wave of layoffs in recent months and thousands have lost their jobs.

A new report suggests that may not be the end of their worries, as the dismissal of employees could have a ripple-effect on those who remain in the company.

People analytics firm Visier found that employees are 7.7% more likely to leave after an “involuntary resignation” or termination occurs within their team, while 9.1% are more prone to resign if a team mate’s exit was voluntary. 

This phenomenon is called “turnover contagion,” the report said, where workers quit their jobs because of their peers. 

When a co-worker’s intentions to quit becomes obvious to others, their behaviors, thoughts and attitudes about their job and the company can become a trigger for others to re-evaluate their own employment situation.

The people analytics firm conducted an experiment across 86 organizations, with more than 1,000 employees around the world. 

“Employee resignations are not isolated events, but happen in a social setting,” it added. Turnover in a team can also create disruption and frustration for remaining team members. 

“Humans have a tendency to imitate other people,” Andrea Derler, Visier’s principal of research and value told CNBC Make It. 

Tech layoffs and hiring freezes continue to mount. Here's a wrap-up of some of the biggest names hit

“When a co-worker’s intention to quit becomes obvious to others, their behaviors, thoughts and attitudes about their job and the company can become a trigger for others to reevaluate their own employment situation.”

This is especially so in a hot job market, where employees receive more “pings from recruiters” than before, Derler added. 

“[This] can provide the ideal breeding ground for turnover contagion as the interviewing process and learning more about potential other employers is made easier for employees.” 

Smaller teams at higher risk 

According to Visier, smaller teams are most at risk of turnover contagion. For example, employees who work on teams of 3 to 5 are 12.1% more likely to resign after a team member quits, compared to 14.5% for teams of 6 to 10, said the study.

That is due to “strong interdependencies” and personal relationships between co-workers in smaller teams, said Derler.  

“Smaller teams may interact more frequently and get a better sense of each others’ shared experiences of the working conditions, the organization as a whole or even management — and of course, each other’s turnover intentions.”

Turnover contagion can last as long as 135 days, the report added, from the moment an employee voluntarily resigns. 

For layoffs however, the contagion window is shortened to 105 days, it added.

Want to quit too? Think again

Derler stressed that it’s “easy to get carried away” when team members resign and she recommends doing a proper evaluation of one’s own work situation before jumping the gun. 

Some questions to help evaluate one’s own circumstances would be: 

  • Do I feel engaged at work?
  • Can I support my current employer’s mission?
  • Can I balance my work with my life outside of work?
  • What is my perceived burnout status?
  • Do I feel fairly compensated and can I see a future for me at this company?
  • Is the driver for my thoughts and feelings about quitting influenced more by my peer who is leaving, or based on my own motivations?

While there are a multitude of personal, professional and economic reasons that can influence a person to quit, companies underestimate the impact that “one person’s resignation can have on their peer’s decision to leave or stay,” the report added.

For employers who are worried about losing more people to resignations, there are “pre-quitting behaviors” that they can look out for, according to Visier.

That includes decreased productivity, a lesser commitment to long-term timelines, or leaving early from work more frequently than usual. 

“While line managers should always work on talent retention activities … it may be particularly important during the first five months after losing a team member to focus on career conversations, ‘stay-interviews,’ or the exploration of internal mobility opportunities to further engage remaining team members,” Visier said in its report. 

Don’t miss: Thousands at Meta, Twitter, Salesforce lost jobs this week—the shock could ripple through the economy for months

Like this story? Subscribe to CNBC Make It on YouTube!

Apple and Elon Musk’s Twitter are on a collision course

SpaceX Chief Engineer Elon Musk takes part in a joint news conference with T-Mobile CEO Mike Sievert (not pictured) at the SpaceX Starbase, in Brownsville, Texas, U.S., August 25, 2022.

Adrees Latif | Reuters

Elon Musk has announced big, albeit confusing, plans for Twitter since he took over the social network last month.

Musk wants to vastly increase the revenue the company makes through subscriptions while opening up the site to more “free speech,” which in some cases seems to mean restoring previously banned accounts like the one owned by former president Donald Trump.

But Musk’s plans for Twitter could put it in conflict with two of the biggest tech companies: Apple and Google.

Tensions are brewing

Phil Schiller, senior vice president of worldwide marketing at Apple Inc., speaks at an Apple event at the Steve Jobs Theater at Apple Park on September 12, 2018 in Cupertino, California.

Justin Sullivan | Getty Images

There are signs Twitter has already seen an increase in harmful content since Musk has taken over, putting the company’s apps at risk. In October, shortly after Musk became “chief Twit,” a wave of online trolls and bigots flooded the site with hate speech and racist epithets.

The trolls organized on 4chan, then barreled into Twitter with anti-Black and Jewish epithets. Twitter suspended many of the accounts, according to the nonprofit Network Contagion Research Institute.

Musk’s plan to offer paid blue verification badges have also led to chaos and accounts impersonating major corporations and figures, which have caused some advertisers to shy away from the social network, in particular, Eli Lilly after a fake verified tweet erroneously said insulin would be provided for free.

The app stores noticed.

“And as I departed the company, the calls from the app review teams had already begun,” former Twitter head of trust and safety Yoel Roth wrote this month in the New York Times.

Fees and subscription revenue

Twitter and Apple have been partners for years. In 2011, Apple deeply integrated tweets into its iOS operating system. Tweets that function as official company communications are regularly posted under Apple CEO Tim Cook’s account. Apple has advertised new iPhones and its big launch events on Twitter.

But the relationship appears poised to change as Musk moves to generate a larger bulk of income from subscriptions.

Twitter reported $5.08 billion in revenue in 2021. If half of that comes from subscriptions in the future, as Musk has said is the goal, hundreds of millions of dollars would end up going to Apple and Google — a small amount for them, but a potentially massive hit for Twitter.

One of Apple’s main rules is that digital content — game coins, or an avatar’s outfit, or a premium subscription— that’s purchased inside an iPhone app, has to use Apple’s in-app purchasing mechanism, in which Apple bills the user directly. Apple takes 30% of sales, decreasing to 15% after a year for subscriptions, and pays the remainder to the developer.

Companies such as Epic Games, Spotify, and Match Group lobby against Apple and Google’s rules as part of the Coalition for App Fairness. Microsoft and Meta have also filed briefs in court criticizing the system and made public remarks aimed at app stores.

One option for Musk is to take an approach similar to what Spotify has done: Offer a lower $9.99 price on the web, where it doesn’t pay Apple a cut, and then users simply log in to their existing account inside the app. Users subscribing to a Premium subscription inside the iPhone app pay $12.99, effectively covering Apple’s fees.

Or Twitter could go further, like Netflix, which stopped offering subscriptions through Apple entirely in 2018.

Musk could sell Twitter Blue on the company’s website at a cheaper price and tweet to his over 118 million followers that Blue is only available on Twitter.com. It might work and could help cut Apple out of any fees.

But that also means Twitter would have to remove many options for informing users about the subscription inside the app, where they’re most likely to make a purchasing decision. And Apple has detailed rules about what apps can link to when telling users about alternative ways to pay.

As Netflix’s app says: “You can’t sign up for Netflix in the app. We know it’s a hassle.”

A power struggle over content moderation

Tim Cook, chief executive officer of Apple Inc., speaks during the Apple Worldwide Developers Conference (WWDC) in San Jose, California, U.S., on Monday, June 4, 2018. 

David Paul Morris | Bloomberg | Getty Images

Musk faces the power of Apple and Google and their ability to decline to approve or even pull apps that violate their rules over content moderation and harmful content.

It’s happened before. Apple said in a letter to Congress last year that it had removed over 30,000 apps from its store over objectionable content in 2020.

If app store-related problems strike Twitter, it could be “catastrophic,” according to the former Twitter head of trust and safety Roth. Twitter lists app review as a risk factor in filings with the SEC, he noted.

Apple and Google can remove apps for various reasons, like issues with an app’s security and whether it complies with the platform billing rules. And app reviews can delay release schedules and cause havoc whenever Musk wants to launch new features.

In the past few years, the app stores have started more closely scrutinizing user-generated content that starts shading into violent speech or social networks that lack content moderation.

There’s precedent for a complete ban. Apple and Google banned Parler, a much smaller and conservative-leaning site, in 2020 after posts on the site promoted the U.S. Capitol riot on Jan. 6 and included calls for violence. In Apple’s case, the decision to ban high-profile apps is made by a group called the Executive Review Board, which is led by Schiller — the Apple executive who deleted his Twitter account over the weekend.

Although Apple approved Truth Social, Trump’s social networking app, in February, it took longer for Google Play to approve it. The company told CNBC in August that the social network lacked “effective systems for moderating user-generated content” and therefore violated Google’s Play Store terms of service. Google eventually approved the app in October, saying that apps need to “remove objectionable posts such as those that incite violence.”

Musk reportedly fired many of Twitter’s contact content moderators this month.

Apple and Google have been careful while banning apps like Parler, pointing to specific guideline violations like screenshots of the offending posts, instead of citing broad political reasons or pressure from lawmakers. On a social network as large as Twitter, it’s often possible to find content that hasn’t been flagged yet.

Still, Apple and Google are unlikely to want to wade into a difficult battle over what constitutes harmful information and what doesn’t. That could end up inviting public scrutiny and political debate. It’s possible that app stores simply delay approving new versions instead of threatening to remove apps entirely.

Future features could also irk Apple and Google and prompt a closer look at the platform’s current operations.

Musk has reportedly talked about allowing users to paywall user-generated videos — something that former employees think would lead to the feature being used for adult content, according to the Washington Post.

Apple’s App Store has never allowed pornography, a policy that dates back to the company’s founder, Steve Jobs, and Google also bans apps centered around sexual content.

Anything that isn’t safe for work needs to be hidden by default. Twitter currently allows adult content, which could put it even more directly into reviewer sights.

“Apps with user-generated content or services that end up being used primarily for pornographic content … do not belong on the App Store and may be removed without notice,” Apple’s guidelines say.

But Musk often runs towards battles, not away from them. Now he has to decide whether it’s worth taking on two of the most valuable and powerful companies in Silicon Valley over 30% fees and Twitter’s ability to host edgy tweets.

An Apple representative didn’t respond to a request for comment. A Google representative declined to comment. Twitter didn’t respond to an email and the company no longer has a communications department. Musk didn’t respond to a tweet.

Laid off from your tech job? Do this to boost your chance of getting hired

The tech world has been rocked by mass layoffs as giants like Meta, Elon Musk-owned Twitter and Amazon bleed jobs amid economic uncertainty. 

The number of IT layoffs in 2022 alone accounts for more than half of all terminations since Covid-19, according to layoffs.fyi, a tracking website.

“Tech companies of all shapes and sizes are reorganizing, carefully evaluating expenses, and ultimately, laying off employees,” said Erin Lau, director for service operations at Insperity, a human resources consulting firm.

Companies are constantly in disruption mode, so today’s requirements for a job could change tomorrow.

Pooja Chhabria

Career expert, LinkedIn

This makes for a tight labor market that is “flooded with unemployed professionals and qualified candidates,” she added.

Other than intense competition, job seekers also face the challenge of acquiring “adaptive skills” to meet the needs of a rapidly changing tech industry, said Pooja Chhabria, LinkedIn’s career expert. 

“Companies are constantly in disruption mode, so today’s requirements for a job could change tomorrow. Employers are therefore keen to recruit agile tech talent — they not only fulfil a specific need of today but have skills that are future-proof to respond to the needs of the future,” she added.

Tech layoffs and hiring freezes continue to mount. Here's a wrap-up of some of the biggest names hit

CNBC Make It spoke with career experts who have tips for laid off tech workers who are looking for new jobs in a challenging economy. 

1. Invest in skill development

Skills are now “the new currency” at work and companies are adopting a skills-first hiring approach, said Chhabria. 

“In the last year, 40% of hirers on LinkedIn explicitly used skills data to find talent, which is up 20% year-on-year,” she added.

“What is more telling is that these hirers are 60% more likely to find a successful hire due to this change in approach.”

To differentiate yourself from the competition out there, Chhabria suggested paying attention to “growing fields where investments are being made.” 

Oftentimes to pivot into the job or industry you want, you don’t need to completely overhaul your skills and may already have the similar skills needed to switch up your career.

Pooja Chhabria

Career expert, LinkedIn

“For example, we have seen large investments in artificial intelligence and machine learning, so skills like SQL, Python, and AWS are all top in-demand skills in software and IT with meaningful growth since 2015.”

Whether you are looking to update your skills or possibly make a career pivot, do not neglect your transferable skills, she added. 

“Oftentimes to pivot into the job or industry you want, you don’t need to completely overhaul your skills and may already have the similar skills needed to switch up your career.”

Setting up job alerts can also help pinpoint learning opportunities, said Vicki Salemi, a career expert from Monster.com.

How to lead through layoffs and manage impacted employees

“Begin with the end in mind. Peruse job descriptions to look at the skills and requirements of jobs you’re pursuing to fill in the gaps,” she explained.

“If there’s a new certification, for instance, in tech that you don’t have but looks like you should and it’s a growing trend, then explore pursuing it.”

2. Time is of the essence 

Job seekers will have less competition when they apply considering the majority of people pause their search until January. Don’t wait.

Vicki Salemi

Career expert, Monster.com

While there are jobs available, experts told CNBC Make It that time is of the essence. 

“When I worked in corporate recruiting I typically saw a decrease in applications in December even though we were actively hiring,” said Salemi.

“Job seekers will have less competition when they apply considering the majority of people pause their search until January. Don’t wait.” 

LinkedIn’s Chhabria agreed, saying that there are still “many companies” who are hiring now and being the first to apply will give applicants an extra edge. 

“LinkedIn [data] shows you’re four times more likely to be hired for a position if you apply in the first 10 minutes, so set up job alerts to notify you as soon as a job that fits your criteria is posted, and apply as soon as possible,” she added.

Small businesses are still facing a strong job market, says Paychex CEO John Gibson

Other than highlighting tech skills in your resume, soft skills like time management and customer service are crucial too. 

“In this uncertain environment, employers are also placing greater emphasis on soft skills such as problem-solving, communication, and resilience. These are key skills that tech workers also need to demonstrate as we are working in a hybrid environment with teams spread across globally.”

3. Networking

Acknowledging that it is natural to feel anxious and lost after being laid off, Chhabria said that “proactively confronting” these feelings is the best way to address them. 

“Being part of a community and seeking help by talking to others in a similar situation might also be helpful,” she added. 

“Start by reaching out to your network … [that] can be the first step to opening the door to connections and conversations with your current contacts, who might be able to offer advice, support, or make introductions that can help you get hired.”

Be sure to engage and check in on your professional community on a regular basis to pave the way for mentorship opportunities, career advice and potential job opportunities.

Pooja Chhabria

Career expert, LinkedIn

Why you should stop overthinking and start taking risks, according to this CEO

Meta disciplined or fired employees for taking over user accounts: WSJ

The logo of Meta Platforms is seen in Davos, Switzerland, May 22, 2022.

Arnd Wiegmann | Reuters

Meta Platforms reportedly fired or disciplined more than two dozen employees and contractors who allegedly compromised and took control of Facebook user accounts, The Wall Street Journal reported Thursday.

Bribery was involved in some cases, the Journal reported, citing sources and documents.

The report said users who were locked out of their Facebook accounts often weren’t able to regain access through traditional means, such as reaching out to Facebook directly. So, some users resorted to seeking outside sources who have contacts within Meta who were willing to unlock accounts for them.

In some cases, according to documents viewed by the Journal, workers accepted thousands of dollars in bribes from hackers to compromise or access user accounts. The terminations or discipline came about as a result of an internal investigation, according to the Journal.

“Individuals selling fraudulent services are always targeting online platforms, including ours, and adapting their tactics in response to the detection methods that are commonly used across the industry,” Meta communications director Andy Stone told CNBC.

According to the report, some of the fired workers were employed as Allied Universal contractors providing security for Meta facilities who were given access to internal employee tools to assist company employees.

The tools, the Journal reported, were referred to as “Oops,” a shorthand for Online Operations, and were originally intended for internal and special case use. The system allowed employees to restore any individual user’s access to their rightful account, according to the report.

“People should never buy or sell accounts or pay for an account recovery service because doing so violates our Terms,” Stone said. “We also regularly update our security measures to address this kind of activity and will keep taking appropriate action against those involved in these kinds of schemes.”

Allied Universal did not immediately respond to a request for comment.

Read more at The Wall Street Journal.

Why the two-day rally to end last week is significant

Let’s say you wanted to design a program to lower inflation. Wouldn’t you do exactly what Federal Reserve Chair Jerome Powell is doing? You would be raising rates aggressively, and I defy you to say that he isn’t doing just that. You would ignore positive numbers like the weak consumer price index print last week by sending out Chris Waller — one of the more hawkish Fed governors — this past weekend to say that the interest rate hikes are far from over. You would claim no victories whatsoever, including the collapse of the cryptocurrency exchange FTX, which filed for bankruptcy on Friday. You would just stay mum, enabling investors to expect another raise of 75 basis points, especially if retail sales this week come in above expectations.

There are many ways to measure a Fed chief. Most people who comment vociferously and viscerally against the Fed tend to be rich folks who want their wealth preserved, but somehow actually come off as altruistic. Or people in the media regard them as such because they are such prized bookings. That’s probably why they are esteemed in the eyes of the viewers.

The old me would say, “What a bunch of selfish bastards.”  The new me simply says, “I know where they are coming from, but they are ill-advised.”

But let’s use this view as a litmus test. You have to wonder where are all the rich castigators? Maybe they realize that Powell is tougher than they thought? I think so.

Their silence is louder than their protestations. Powell is the real deal and he’s not done until he softens our economy, shrinks our portfolios, reduces our purchasing power, drops our wages, and makes our goods cheaper. The good news so far: He is doing all of that. The amazing news? He’s not hurting corporate earnings in the process. They are shining.

Consider: Last Thursday and Friday were back-to-back winners, something that’s very rare in this year-old bear market. If you bought at the market high on Thursday, you are still up. I can count on one hand how many times that has happened since the peak.

Could it be as significant as many believe? 

That’s a tough question, because in order for the Fed to get all of its boxes checked, Powell needs wages to level off and that has not happened. He needs to see weakness in the CPI beyond the handful of line items that softened things in last week’s reading. Most importantly, he needs to see our purchasing power diminished, and we are most definitively not there yet.

But let me throw you a bizarre curveball. Part and parcel with the spending power reduction is speculation. The speculators overspend because it’s in their nature is borrow too much. What then do we make of the crypto meltdown? How much money is being lost in crypto really? How big are the losses? I am so sick of the Lehman moment nonsense (the collapse of Lehman Brothers in 2008 was the key moment of the 2008 subprime mortgage crisis). I don’t even like the comparisons to the fall of Enron in 2001. As my late mother would say, comparisons are odious — had she lived longer, she might say irrelevant.

What matters is that financial cataclysms like the ruination of FTX CEO Sam Bankman-Fried do make people reassess wealth and spend less — and I don’t just mean those who actually lost and will lose a lot more money in these often worthless crypto coins.

Take it a step further: Another unknown is the amount of money invested in FAANG/M (Facebook, Apple, Amazon, Netflix, Google, Microsoft). If you are in the S&P 500, you are certainly feeling punished, but if you are mostly in FAANG/M, you are feeling broke.

Why does this all matter? Because the Fed would ideally like to stall for time while the supply chains get more efficient, something we are seeing with the lowering costs of logistics. It would sure help, however, if we slowed down spending as a nation. We need both more goods coming to market and fewer goods being sold. Any glut will cause both lower prices and layoffs.

Does it matter if the layoffs are largely concentrated in anything technology, including fintech and real estate tech and retail tech?

At one time I thought these sectors were too small to make a difference. You would need mass layoffs in retail, autos, housing, you name it — all but the insatiable health sector.

Now I am not so sure. Maybe Silicon Valley layoffs have more of an impact on the economy than we thought. Just as tech became a larger part of the S&P, it also became a larger part of the economy. Sure, it’s not nationwide, but tends to be concentrated just in Northern California and Seattle. But the layoffs will be in the tendrils that aren’t in those areas.

Anything that lessens the velocity of spending, coupled with the reduced price of logistics, might lead to lower prices and wages — which should result in slower and smaller rate hikes. That’s why the 2-year Treasury yield has such a hard time staying above 4.5%.

I don’t want to say we are out of the woods when Fed officials are saying we are smack in the woods. I do want to say that Thursday and Friday felt significant to me because they were actually based on softer numbers that seemed unassailable and yet, at the same time, did not portend earnings shortfalls.

Sure, it seems ridiculous that we could get through this whole process with giant earnings blowups. But we have seen the hottest sectors of the economy — tech and the internet — revealed as far more vulnerable than we thought. It’s amazing how much Meta Platforms (META), Alphabet (GOOGL) and even Amazon (AMZN) depend on advertising for their revenue growth and that’s in a tailspin as retailers feel the Fed’s pinch. Microsoft (MSFT) has felt the last of the PC Armageddon. Advanced Micro Devices (AMD) and Nvidia (NVDA) have been walloped by the undeniable weakness in gaming — even as the gaming companies deny the weakness.

Netflix (NFLX) is coming back, but it was never that big. Apple (AAPL) is hanging in there, even as that seems impossible to last. But you know my feeling on Apple: own it, don’t trade it.

I am not including the hundreds of other technology stocks that have collapsed. But if I did, the decline can only be considered seismic. 

Which leads to a logical question: What if tech of all sorts and crypto turn out to be larger than we think? What if they can cause the slowdown that we need to keep the Fed at bay? Do we really need old-line companies to miss their numbers to see the end of the tightening? Maybe the voracious spending that came from these hot sectors cools while the logistical nightmare ends. It could be enough make us wonder if we aren’t further along in the process of breaking inflation than we thought.

As I think about what to say at Thursday’s monthly meeting, remember we will have some really amazing retail sales data to help solve the quandary. The best that can be said, though, is that the two days up to end last week seem significant — especially in light of the collapse of FTX.

Those two days seem to be saying that the Fed is catching a break. Although I would say it is a break of its own making.

(See here for a full list of the stocks in Jim Cramer’s Charitable Trust is long.)

As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade.


From Elon Musk to Sam Bankman-Fried, a bad week for market geniuses

Are founders good or bad for business?

From the FTX bankruptcy and downfall of crypto “rock star” Sam Bankman-Fried to the chaos at Twitter, it has not been a good week for the geniuses of capitalism. Elon Musk’s abrupt and in some cases already reversed decisions since taking over the social media company back up his contention that so far his tenure “isn’t boring,” but also expose the type of corporate governance issues that are too often repeated to the detriment of shareholders.

“Without a doubt, Sam Bankman-Fried is a genius,” said Yale School of Management leadership guru Jeffrey Sonnenfeld in an interview with CNBC’s “Fast Money” on Thursday. “But what’s hard is that somebody has to be able to put on the brakes on them and ask them questions. But when they develop one of these emperor-for-life models … then you really don’t have accountability,” Sonnenfeld said.

Few would doubt the genius of Elon Musk, or Mark Zuckerberg, for that matter, but few would put them in the same class with many companies that have failed spectacularly, though Sonnenfeld says they share the link of being allowed to operate without enough corporate oversight.

“It’s not crazy to talk about Theranos, or WeWork, Groupon, MySpace, WebMD, or Naptster – so many companies that fall off the cliff because they didn’t have proper governance, they didn’t figure out, how do you get the best of a genius?” Sonnenfeld said.

In the case of Bankman-Fried, who stepped down from his CEO role at FTX as the company filed for Chapter 11 bankruptcy on Friday, Sonnenfeld pointed to the lack of a board that should have been asking tough questions.

Tom Williams | CQ-Roll Call, Inc. | Getty Images

But boards are often unable to manage genius, Sonnenfeld said. Zuckerberg is another example. When Meta, formerly Facebook, announced it would be shifting its focus to the metaverse last year, Sonnenfeld said his board members were essentially powerless. Meta laid off 11,000 of its employees this week and announced a hiring freeze as it has faced declining revenue and increased spending on a metaverse bet that Zuckerberg has said may not pay off for a decade.

Tesla shares have not been immune from Musk’s Twitter takeover, with the stock plummeting this week after Musk told Twitter employees on Thursday he sold Tesla stock to “save” the social network. One Wall Street analyst decided that Twitter is now a business risk to Tesla and yanked the stock from a best picks list.

Musk (though not Tesla’s founder) and Zuckerberg oversaw the creation of two trillion-dollar companies, though both have now lost that market-cap status in stock declines caused by a variety of factors — from macroeconomic conditions to sector-specific risks, a market valuation reset for high growth companies, and also leadership decisions.

Market research shows that founders can be a financial risk to company value over time. Founder-led companies have been found to outperform those with non-founder leaders in early year, according to a study from the Harvard Business Review that examined the financial performance of more than 2,000 public businesses, but virtually no difference appears three years after the company’s IPO. After this time, the study found that founder-CEOs “actually start detracting from firm value.”

Major players in Elon Musk’s Twitter deal, including Fidelity Investments, Brookfield Asset Management and former Twitter CEO and co-founder Jack Dorsey, did not take a seat on the company’s board or have a voice throughout the transaction, Sonnenfeld said, which gave the deal no oversight. Musk is now splitting his time between six separate companies: Tesla, SpaceX, SolarCity/Tesla Energy, Twitter, Neuralink and The Boring Company.

Companies led by lone geniuses need strong governance first and foremost. Sonnenfeld says having built-in checks and balances and a board that has field expertise as well as the ability to watch out for mission creep is critical to allowing these businesses to function with less risk of costly blunders.

Tesla and Meta governance scores within ESG rankings have long reflected this risk.

That doesn’t mean the market doesn’t need geniuses.

“Sure, we’re better off with Elon Musk in this world as we are better off with Mark Zuckerberg,” Sonnenfeld said. “But they can’t be alone.”

Through the recent issues, these under-fire leaders have been critical of themselves.

FTX’s Sam Bankman-Fried tweeted Thursday morning that he is “sorry,” admitting that he “f—ed up” and “should have done better.”

Zuckerberg said of the mass layoffs at Meta in a statement equal parts apology and unintended restatement of the governance problem, “I take full responsibility for this decision. I’m the founder and CEO, I’m responsible for the health of our company, for our direction, and for deciding how we execute that, including things like this, and this was ultimately my call.”

Musk tweeted, “Please note that Twitter will do lots of dumb things in coming months.”

But whether an apology or an admission from genius that it too can be dumb on occasion, Sonnenfeld says these leaders would be better off letting others do the criticizing — much sooner, and much more often.

“They have to be managed, they have to be guided and they have to have a board that can help get the best out of themselves and not let them develop this imperial sense of invincibility,” he said.

The week in review, the week ahead for Nov. 11: Inflation, rally

People walk outside of the New York Stock Exchange on July 25, 2022 in New York City.

Spencer Platt | Getty Images

Markets closed higher for the week after a stellar rally Thursday that saw Big Tech stocks soar on the back of weaker-than-expected consumer price index (CPI) data for October. The S&P 500 closed up more than 5% for the week, its best week since June. Bond yields and the U.S. dollar fell, while investors hoped the CPI news could slow the Federal Reserve’s pace of interest rate hikes next month.