Web Dev layoffs, Meta/Google Skyrocketing, Interest rates up – where do we go from here?

Remember “Sell in May and go away“?

There’s an old stock market saying suggesting that investors should clean up their portfolio on May 1st and start buying back around Halloween. Historically speaking, higher growth was observed from November to April when compared to the following six months.

Well, that didn’t work this year. The S&P 500 has surged nearly 10% since then and is about to close July with a fifth month of gains. Do you think the market will keep going up?

The market seasonality is still going sideways – with indicators moving in different directions:

• Meta reported 11% revenue growth in Q2 2023. Following layoffs and drop in VR investing, the platform is going strong (even as Threads is plummeting).
• Alphabet (Google) exceeded expectations on both top and bottom lines. Ads are still going strong – so is the cloud division (usually translates to increased usage for their cloud enterprise clients).
• Our WP consultancy DevriX ranked as the 6th best-rated agency worldwide – after Google Bard scoured all client reviews across the board and reported the ranking. Super stoked with the team here 👏
• Fed pumped the rates up another 0.25% (see the chart in the Global News section below). The economy moving faster than usual in the start of the summer.
• The inflation rate in June is at its slowest in more than 2 years despite the increased economic reports – or even the release of the Barbie and Oppenheimer movies (resulting in 1.9% increase in Bank of America card purchases in July for entertainment and such)

It all looks great – until it isn’t.

• One of America’s biggest and oldest trucking companies is going under. Yellow–founded in 1924–officially shut down its regular operations on Sunday and is expected to file for bankruptcy today. It is (was?) the third-largest US carrier by less-than-truckload revenue. 
• Ocado financial docs report that Shopify bought 6 River Systems for $450M in 2019 and sold it for merely $12.7M this year. Shopify results are yet to follow later today (will disclose readings in the next newsletter.
• The US dollar has been decreasing in value since September. This impacts the buying power of other regions outside of the US and stimulates foreign economies while decreasing the impact on US earners.
• Some of the leading WordPress agencies out there (also in top 10) announced layoffs over the past month – Human Made, XWP, and WebDevStudios among them. I have close friends on top of all giants and I personally feel the pain of the market hit going on for the past 2 years.

While my focus is on business strategy and growing companies, the extended focus on the market updates here is necessary for strategic decision-making.

What once was roadmap planning or quarterly rocks/OKRs can now shrink down to monthly updates or even weekly sprints, with the unpredictable state of the economy.

So we keep iterating and pivoting – new value propositions, new ways to pitch, testing out new lead generation channels and giving old ones a second shot. It’s calibration time!

Yours,
Mario

✍️ Compliance is the Achilles Heel of Growing Businesses –  Join me in this episode of Osom to Know, where I was interviewed and asked to discuss compliance, and how it can be the be-all-end-all when scaling a business. 

✍️ Diversifying Your Income – In the realm of personal finance, dependence on a single income source is a strategy of the past. Have you considered diversifying your revenue streams but found yourself uncertain about where to start? Luckily for you, I covered that in my slide deck this week.

📄Meta Q2 double-digit growth – Meta (formerly Facebook) reported earnings and revenue for the second quarter that exceeded analysts’ estimates, driven by a rebound in the digital advertising market. The company’s stock rose 7% in extended trading, and it provided a better-than-expected forecast for the current period.

📄Google Cloud revenue up 28% – Alphabet’s shares increased by approximately 7% in after-hours trading following their earnings report, which showed better-than-expected revenue and profit driven by growth in their cloud-computing unit. The company reported earnings of $1.44 per share and revenue of $74.6 billion, exceeding analyst expectations.

📄Fed hikes by a quarter point – The Federal Reserve raised interest rates for the 11th time since March 2022, bringing them to their highest level in 22 years. Another rate hike is still a possibility if the economy shows signs of strength and inflation remains elevated, according to Fed Chair Jerome Powell.

📄European Stock Rise – European stocks saw a slight increase on Monday, marked by news of a continued slowdown in headline eurozone inflation, which raised expectations that the European Central Bank (ECB) might soon halt interest rate hikes. Meanwhile, Asian markets also rallied amid expectations of further economic stimulus from the Chinese government following weaker-than-expected services sector performance in July and a slight weakening in manufacturing.

📄The Fed’s latest SLOOS – U.S. banks tightened credit standards and saw weaker loan demand in the second quarter, according to a Federal Reserve survey, indicating the intended impact of the central bank’s interest rate hike campaign on the nation’s financial gears. The survey also revealed that banks anticipate further tightening of standards for the remainder of 2023.

📈 Interesting week, as Dow Jones takes a +1,000 hike, unlike NASDAQ and S&P 500, which remain mostly untouched.

📈 Interesting week, as S&P and NASDAQ continue towards the path of seeing a rise for the fifth month in a row. Let’s have a look at how S&P moved this month:

• S&P: 4,576 (+2.72%)

📈 The economic outlook and mortgage rates are subject to change, but currently, mortgage rates are holding strong at around 6.5 to 7 percent due to inflation and the actions of the Federal Reserve, with expectations for rates to remain stable or potentially rise slightly in the near future. Here’s how it’s been looking since the beginning of 2023:

• Mortgage Rate average: 6.81% (+0.33%)

📈 With the Fed’s recent interest hike and  Senior Loan Officers Opinion Survey, the US loan market is shrinking rapidly. Commercial and Industrial loans have been particularly affected, with shares of some businesses tightening terms crossing above 50%. Banks expect even tighter conditions moving forward.

• Fed Rate: 5.33% (+0.25%)

📰 This week the news has not been kind to the US, following their interest rate hikes and downgrades of the credit rating. 

• Fitch downgrades its credit rating for the U.S. government from a top rating of AAA to AA+.
• Former President Trump has been indicted by a federal grand jury investigating efforts to overturn the 2020 election.
• Federal Reserve raises interest rate to 5.5%, its highest level in 22 years.

Good news for all the learnaholics and investors this week! All Tech Investors Academy materials are now available! You can now revisit sessions and delve deeper into topics that interest you the most. Elite and Club members have priority access.

Other than that, here are some gems this week:

• Finqware – Raising €3M to fully automate European corporate financial operations

• Bunnyshell– raising up to €4M to grow its sales to Fortune 100 firms and beyond.
• SmartNanotubes – Raising €1M to scale their chips for gas detection and introduce them to the mass market.

Note: Got a round going that you want to feature – your own business or a portfolio company? Get in touch.

You don’t need to start from ground zero when starting a business. Have a look at these offers from Flippa:

• Payment & Invoicing SaaS – This well-established fintech business, functioning as a comprehensive payments platform, has served 200,000 clients from various sectors and has processed over $200 million in payments in the past year.
  • Monthly Profit: $52.7K
  • Annual Revenue: $836K
  • Age: 10 years

• Lead Generation Subscription Service – А promotional service for digital and creative firms that holds significant growth prospects through advertising and marketing pathways. It brings in monthly recurring revenue of $5.4K and boasts a customer lifetime value of $1.8K.
  • Monthly Profit: $6.5K
  • Average Order Value: $1.7K
  • Profit Margin: 67%
• Shopping & Lifestyle Blog– This profitable 15-year-old venture specializes in shopping and lifestyle content, generating income through advertisements and affiliate sales. It enjoys a high profit margin of 91%, has an audience of 3,000 email subscribers, and a strong social media presence with 57.5K followers.
  • Monthly Profit: $2.8K
  • Monthly Page Views: 28.6K
  • Authority Score: 32

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💡 Eager to incorporate my recommended solutions? Track my angel investments. Sharing, applying for open roles, or writing reviews helps a ton.  And anything else I try to publish on my blog and my courses here!