Trian’s investment in Comcast highlights stock underperformance but is unlikely to trigger major changes
Brian Roberts, chairman and chief executive officer of Comcast Corp.
Patrick T. Fallon | Bloomberg | Getty Images
Investors like Trian’s Nelson Peltz are used to calling the shots and agitating for change. So why would Peltz take a stake in Comcast, a controlled company with a decades-long history of strong management?
The answer may be simple: to highlight an undervalued company. Peltz could conceivably be a winner simply by picking a cheap stock. Trian said earlier this week that it’s held “constructive discussions” with management but hasn’t officially asked for a particular change.
“The pendulum of investor confidence now under-appreciates Comcast’s strategic intelligence and commitment to long term value creation,” said Peter Supino, an analyst at Bernstein, in a note to clients.
But, if Trian is just betting on investors to suddenly fall in love with Comcast, initial reactions weren’t encouraging. The market shrugged at Trian’s announcement that it had acquired a 0.4% in Comcast. Shares were little changed on the announcement and have actually fallen in the days since.
Comcast is the parent company of NBCUniversal and CNBC.
Comcast chief executive officer Brian Roberts has a 33% voting share through his family’s ownership stake. Unless there’s a shareholder mutiny at an enormous scale — highly unlikely — Roberts can simply tell Peltz to kick rocks. Stocks often surge on news of an activist bet. In this case, the lack of a reaction can be summed up by this: big changes probably ain’t coming.
NBC spinoff unlikely
The most obvious activist ‘ask’ would be splitting Comcast’s cable operations from Sky and NBCUniversal, whose entertainment cable networks, such as E!, Bravo, USA and Syfy, are no longer relevant in a streaming video world. New NBCUniversal CEO Jeff Shell is already restructuring the company to centralize decision making and cut jobs.
The pandemic has further underscored NBCUniversal as an anchor on Comcast shares, with Universal theme parks shut down for months and now operating at limited capacity. Movie theater attendance has also crumbled, causing Shell to eliminate a longstanding detente with theaters around windowing to bring certain films straight to Peacock, NBCUniversal’s streaming service.
“There are a lot of investors who would like to see Comcast broken into two separate pieces,” MoffettNathanson analyst Craig Moffett said. “I don’t know if that is or isn’t what Trian is asking for, but it very likely would result in a higher valuation, and it wouldn’t cost Comcast anything to do.”
Roberts has always had a long-term view of NBCUniversal. Trian’s involvement is unlikely to change his mind, according to people familiar with the matter.
But Comcast’s recent underperformance versus Charter — a pure-play cable company — is startling. Charter, the second-largest U.S. cable company, has a trailing price-to-earning ratio of about 60 and a forward P/E ratio of more than 30. Comcast’s relative ratios are 18 and 15, respectively. Charter’s 2021 EV/EBITDA ratio is about 11.5x. Comcast’s is about 9x.
Charter shares have gained 50% over the past 52 weeks compared to the S&P 500’s 9% gain. Comcast shares are up 2% over the same time period. Shares of Comcast are up about 46% over the past five years, compared to shares of Charter, which are up 221%.
Comcast’s underperformance is more galling because it’s long been viewed by investors and analysts as a best-in-class cable operator. The company’s cable and digital video user interfaces, Xfinity X1 and Flex, are so good that other cable companies license them.
Of course, video is an after thought for cable companies these days. Broadband penetration is what investors care about, given the business’s gaudy profit margins. But there, too, Comcast is succeeding. Roberts said earlier this month the company was adding internet customers at a record pace in the third quarter while not caring whether they signed up for cable TV.
Broadband is “the heart and soul of the company,” Roberts said at Goldman Sachs’ Communacopia conference on Sept. 15 — perhaps cagily speaking to investors like Trian.
“Broadband, it goes without saying, is in general a fantastic business for us and one we believe that will have great growth to come in the years ahead,” said Roberts, who estimated new customers would “greatly exceed” last year’s record high of 1.4 million net adds.
Ironically, NBCUniversal is doing more for broadband penetration than ever before. When Comcast acquired all of NBCUniversal in 2013, there were few synergies between the content business and cable distribution. If anything, the NBCUniversal acquisition signified a hedge on the cable distribution business. At the time, cable networks were pushing programming cost increases at a 10% clip each year. Owning networks helped Comcast push back on diminishing video margins, as the cable company couldn’t pass along cost increases as fast as programmers jacked up prices on networks.
Now, as cable networks slowly fade away, Comcast is giving away Peacock to its broadband-only subscribers. Comcast also offers a free Flex set-top box and operating system to aggregate additional streaming content. The purpose of content is to drive broadband usage.
Sky’s global value
Still, Trian may want to emphasize to Roberts that Comcast’s value is in broadband distribution rather than entertainment. Paying tens of billions for acquisitions like European distribution and content provider Sky — the product of a bidding war with Disney — may be concerning to investors who don’t want Roberts losing focus.
But Roberts’ view of Comcast has been that the company isn’t competing with Charter (the companies largely can’t compete anyway due to municipal rules that prevent two cable companies operating in the same footprint). Instead, Roberts views Comcast as a global media company, competing with Apple, Google, Facebook and other giants that have the resources to dominate people’s lives. Acquiring Sky gives Comcast an entry way into global growth that had previously been unattainable as a U.S.-only company.
Isolating Comcast cable value
The most out-of-the-box answer for Comcast may be to financially engineer a way to give investors a chance to invest in its cable operations business without the content interference.
Comcast could do this by inventing a tracking stock that mirrors its broadband-only business (like John Malone’s Liberty Broadband) or it could sell shares in Comcast cable to publicly trade, giving investors a chance to buy in to the broadband business while still owning and controlling all assets.
Dell has a similar structure with VMware. It owns more than 80% of VMware while floating the rest of the company. Investors can put money directly in the virtualization company without being dragged down by Dell’s lower-growth legacy technology assets.
Still, those structures tend to be messy and often temporary. Dell has twice toyed with the idea of acquiring or reverse merging into the VMware stub and is now taking steps to spin off its stake to reunite the majority and minority stakes.
And while Roberts is known as an “investment banker in chief” because of his proclivity over the years for deals, the benefits of being a controlling shareholder are that you don’t have to worry about short-term trends.
“We at Liberty try to look at the long term, and I think Brian does the same,” Greg Maffei, Liberty Media’s CEO, said Thursday in an interview with CNBC’s Squawk Box. “He has several businesses which are strong now, including the cable business. Comcast runs a very good cable company. It’s going to have big growth with broadband subs. And then he’s got other businesses in a headwind because of Covid. I think he’s certainly concerned with the current performances of those businesses, but I think he’s more concerned with the long term.”
Disclosure: Comcast is the parent company of NBCUniversal and CNBC.
Watch: Liberty Media’s Greg Maffei on Trian taking a stake in Comcast
Mark Zuckerberg, Chairman of Facebook, speaks on the second day of the 56th Munich Security Conference. The fight against propaganda campaigns and other attempts at manipulation costs Facebook billions every year.
Tobias Hase | picture alliance | Getty Images
Facebook on Thursday announced new policies that will limit the spread of private groups on its social network that focus on giving users health advice, as well as groups with ties to violence.
The company will no longer show health groups in its recommendations, saying that “it’s crucial that people get their health information from authoritative sources,” in a blog post. In the past, closed groups have been used by Facebook users to spread misinformation about vaccines and Covid-19.
Similarly, the company said it will limit the spread of groups tied to violence by removing them from recommendations, restricting them from search and reducing how often their content shows up on people’s News Feeds. This move comes as Facebook has struggled to moderate private groups, including a militia group in Kenosha, Wisconsin, that used Facebook to organize an event where two people were killed in real life.
Facebook said it removed the pages tied to that event after it happened, blaming an “operational error” for allowing the event to stay up despite the fact it violated the company’s policies. But BuzzFeed later discovered that Facebook did not remove the pages; one of the group’s admins did. It was only then that Facebook admitted it never took the event down.
Additionally, Facebook will now archive groups that do not have admins, which are key to moderating groups. If an admin steps down from their role, they can invite other groups members to replace them. Facebook will also suggest this role to active members, but if no one steps up, the company will archive those groups. If Facebook removes a group for policy reasons, administrators and moderators of that group will be unable to create any new groups for a period of time.
Facebook on Wednesday announced the Oculus Quest 2 virtual reality headset. It’s a successor to last year’s Quest and, like that version, doesn’t require a computer to run. Everything you need to use VR is bundled inside.
This is the strategy Facebook is taking moving forward. It’s ditching the Oculus Rift headset, which required a PC to operate.
You can still run advanced PC virtual reality games designed for the Rift on the Quest 2 using an Oculus Link USB-C cable. Oculus Link was in beta on the original Oculus Quest, but now it’s an official feature. This is Facebook’s long-term vision: a headset you can use anywhere you want, but that you can still link to a PC to render games that require more powerful hardware.
The Oculus Quest has been popular during the coronavirus pandemic, as people look for more entertainment options at home. Facebook and its retail partners have had a hard time keeping them in stock. Facebook told CNBC that it’s boosting production of the Oculus Quest 2 in order to meet demand. But, it still hasn’t revealed how many of these VR headsets it has actually sold.
To help further boost sales, Facebook said it’s launching the Quest 2 in Japan, its first entry in that market, where it hopes to attract gamers.
One new problem that may hurt growth, however, is a Facebook account is required to use Oculus headsets. That could turn off people who don’t have accounts and don’t want to have one.
A step in the right direction
The home screen in the Oculus Quest 2.
The new Quest is smaller than last year’s model and includes better controllers and a screen that’s smoother and sharper, and new Qualcomm processors, which should improve its performance.
Facebook just sent me one of the new Quests, and I’ve only used it for a few hours so far, but I noticed that images look crisper than they did on the original Quest. The Oculus Quest 2 is smaller than the predecessor, which made it comfortable while wearing over longer periods. It’s 10% lighter than last year’s model, despite having a new screen with 50% more pixels and a display with a faster refresh rate, which makes it smoother to browse through lists, websites, apps and so on. It’s also great for games.
The Oculus Quest 2, like its predecessor, can do a whole bunch of stuff. You can watch Netflix in a gigantic virtual movie theater or a comfortable living room environment. You watch live TV with Sling TV. There are hundreds of games to pick from, ranging from racing to first-person shooters. And it feels really fast. There aren’t long load screens and graphics looked great. It’s also super easy to navigate with the included controllers, especially if you’ve used any sort of gaming controller before. Facebook even has an option that lets you pinch, scroll and select stuff using just your hands, though I always just preferred using the handsets.
The game Population: One for Oculus Quest 2.
One new game that’s coming out later this fall, called Population: One, was really fun. Like Fortnite, it has a map that shrinks in size, and players fight to remain the last team standing. But, you can climb anything, including huge buildings, and then fly down from them. It’s pretty wild, and I actually felt scared climbing a building in VR, even though I knew I was sitting at my desk. Some of the more realistic settings made me really nauseous afterwards, though. You need to get adjusted to moving around in a digital world while standing still in real life. So, newcomers to VR (or even advanced gamers like myself) may want to change some of the settings to make it a bit easier on the stomach.
VR is still not social enough
Last year’s Quest proved that V can be great entertainment, and that Facebook’s 2014 acquisition of Oculus, which at the time was the clear leader in VR, might prove worth the $2 billion it spent. It works well and it’s fun.
Still, getting a mass population of regular people into VR may be tough. Gaming with a console is a social activity: You sit on the couch with friends and can see and hear their reactions as you play against one another. Virtual reality is still profoundly isolating.
One way to make it more social would be for Facebook to build a so-called “metaverse” of sorts where you could jump into a single app and hang out with friends, play games, and watch movies and TV shows, all in a huge alternate universe where thousands or millions of people interact. That seems particularly appealing during the pandemic, since we can’t hang out and go to football games or concerts in person. It’s the idea inside the book (and movie) “Ready Player One,” which at one point was required reading for all new Facebook employees — and Facebook, which already runs global-scale services where nearly 3 billion people communicate and interact, seems perfectly positioned to build it.
Ready Player One
Source: Warner Bros.
Facebook is beta-testing a project called Horizon that will connect people all over the world and let them play games together, which may be a first move toward this kind of environment, but it’s still in beta-testing and not available for the Quest 2 yet.
For now, VR is best if you just want to escape reality for an hour or two. I’ve had fun experiences sharing it with the family, while others watched on, but you’ll need multiple units to actually play games together. At $299, that’ll add up quicker than the new Xbox One X and PS5 consoles, which allow people to game side-by-side on the couch.
The Oculus Quest 2 goes on sale Oct. 13. The entry-level model has 64GB of storage for $299 while a model with 256GB of storage will cost $399. Casual users only need the entry-level option.
The founder and CEO of Facebook Mark Zuckerberg speaks during the 56th Munich Security Conference in Munich, southern Germany, on February 15, 2020.
Christof Stache | AFP | Getty Images
Facebook on Monday night announced it will launch a new information hub to provide its users with “science-based information” about climate change. It said a link to the hub will appear when people search for information related to climate change on Facebook, or when people see certain posts related to the subject.
The climate change hub comes after the company dealt with a rash of misinformation across its services regarding the cause of the wildfires raging across the Western U.S. One article containing false information blaming the wildfires on antifa arsonists had been shared more than 63,000 times on Facebook, according to The Guardian.
The new feature is called the Climate Science Information Center, and it will provide Facebook users with facts, figures and data from factual sources, the company said in a blog post. These sources include the Intergovernmental Panel on Climate Change, U.N. Environment Programme, the National Oceanic and Atmospheric Administration, World Meteorological Organization and the Met Office.
In addition to the information center, Facebook said it will continue to reduce the distribution of posts containing false information on its News Feed feature and it will label those posts as false. Facebook, however, did not say it would remove those posts. The company also did not say if it would remove or label posts within private Facebook groups that contain misinformation about climate change.
This year, the company has deployed information centers as a tactic to combat the spread of misinformation on Facebook and Instagram. The company launched a Covid hub in March, and in August, Facebook rolled out a voter information center.
Facebook’s Climate Science Information Center will go out to users in the U.S., U.K., France and Germany at launch, and it will appear in more markets “soon,” the company said.
Police and local officials on the West Coast are battling multiple raging fires. They’re also fighting a wave of misinformation from false rumors spread in neighborhood Facebook groups and on far-right websites that antifa activists were setting the blazes.
At least six groups have issued warnings about the false rumors, including some pleading with the public to stop sharing the misinformation.
“Rumors spread just like wildfire and now our 9-1-1 dispatchers and professional staff are being overrun with requests for information and inquiries on an UNTRUE rumor that 6 Antifa members have been arrested for setting fires in DOUGLAS COUNTY, OREGON,” the Douglas County Sheriff’s Office wrote in a Facebook post on Thursday.
The false claims also became fodder for the now-sizable online QAnon community, which began amplifying various false reports earlier in the week.
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The sheriffs in Jackson County, Oregon, and Mason County, Washington, posted similar warnings, begging locals to stop spreading unsubstantiated claims.
A firefighters union in Washington state called Facebook “an absolute cesspool of misinformation right now,” in a post that sought to quell more rumors about the fires’ origins.
Antifa has emerged in recent months as the focal point of far-right paranoia, fueled by evidence-free accusations from President Donald Trump and other government officials that the loosely knit anti-fascist organizations that make up antifa are behind everything from violence during protests to plots to invade suburban neighborhoods.
The Medford police debunked the antifa rumor along with a separate, less viral false claim that the fires were a result of arson by the Proud Boys, a far-right group whose members describe themselves as “western chauvinists” and have been an antagonistic mainstay of Black Lives Matter protests.
A fire in Ashland, Oregon, is being investigated as arson, but The Oregonian reported Ashland Police Chief Tighe O’Meara as saying, “One thing I can say is that the rumor it was set by Antifa is 100% false information.”
The dozens of fires burning across California, Washington and Oregon, which have killed at least 20 people, started in a variety of ways, mostly by people, though not intentionally. Lightning, faulty or knocked-down power lines and accidents, like the El Dorado fire in California ignited by a pyrotechnic device during a “gender-reveal party,” are some of the reported causes of this year’s wildfires.
Despite protestations from law enforcement, rumors have spread through far-right Facebook groups and news websites like Gateway Pundit and the Post Millennial in stories alleging without evidence that Jeff Acord, a 36-year-old man arrested on charges of starting a fire in Puyallup, Washington, was an “antifa militant.” The Post Millennial later changed the story to call Acord a “BLM activist.”
Some articles that have pushed misinformation about the fires have gained traction on Facebook.
An article from the far-right website Law Enforcement Today claimed without evidence that the wildfires were a “coordinated and planned” attack. It attracted more than 330,000 comments, likes and shares on Facebook, according to data from CrowdTangle, a Facebook-owned social media analysis tool. Late Thursday night, Law Enforcement Today topped the story with an update stating that “suggestions that Antifa members have been arrested are unfounded,” but left the article up.
In response to fact checks debunking the antifa rumors, Facebook was “reducing its distribution and showing strong warning labels for people who see it, try to share it, or already have,” according to Facebook spokesperson Andy Stone.
One of the earliest claims of antifa involvement came from Paul Romero, a former Republican candidate for U.S. Senate in Oregon, who said in a viral tweet that Douglas County police had arrested six antifa arsonists. Romero stood by his tweet in a phone interview on Thursday, calling the fires a “coordinated intentional attack,” by antifa but providing no evidence for the claim, saying he heard about the arrests from “sheriff’s deputies that have been talking.”
Romero’s post was further spread by followers of QAnon, a conspiracy movement based on the idea that Trump is leading a secret war against a group of political, business and Hollywood elites who, the theory posits, worship Satan and murder children. The leader of the movement, an anonymous figure who posts to a message board as “Q,” included Romero’s tweet in a post early Thursday.
Some users responding to Romero’s posts said they were sent there by Q and pushed false QAnon talking points that the fires were part of an elaborate political plot. According to data gleaned from the disinformation analytics tool Hoaxy, most of the traffic to Romero’s post came after Q’s post, almost a full day after Romero had posted it.
Antifa, a loose network of autonomous groups of radicals who rely on direct action rather than the police or the court system to shut down the far right and perceived fascism, has been increasingly blamed for unrest during Black Lives Matter protests and become the subject of unfounded rumors that the group would arrive in white suburbs by the busload to loot homes and destroy town centers. Those false rumors have often led to standoffs between local Black Lives Matter protesters and armed militias who come to guard their towns from a suspected mob that never arrives.
Justin Yau, an independent journalist covering the fires, tweeted on Thursday from Molalla, Oregon: “We were approached by an armed group telling us to leave, they are wary of outsiders based on rumors of arsonists starting fires in the area.”
In May, Trump tweeted that he would designate antifa as a terrorist organization and has made the group a major target in campaign ads and texts since. “ANTIFA THUGS WILL RUIN SUBURBS!” the Trump campaign texted supporters on Thursday.
Republican bill seeks to limit liability protections for tech platforms without getting rid of them completely
Three top Republicans are seeking to limit a liability shield for tech platforms while maintaining some key protections through a new bill that would reform Section 230 of the Communications Decency Act.
The Online Freedom and Viewpoint Diversity Act aims to maintain the key provisions of Section 230 that would allow platforms to keep operating openly while limiting the types of content they could moderate if they wish to maintain their liability exemption. The bill was introduced by Senate Commerce Committee Chairman Roger Wicker, R-Miss., Judiciary Committee Chairman Lindsey Graham, R-S.C. and Judiciary Committee Tech Task Force leader Marsha Blackburn, R-Tenn.
“We do think that it is important that there be a revisit and not a repeal of Section 230,” said Blackburn, who sits on both the Commerce and Judiciary Committees, in a phone interview with CNBC on Wednesday. Blackburn said the modern internet is not the same as that which existed at the time of Section 230’s creation, saying tech companies are no longer in their “infancy.”
Section 230 was enacted in the 1990s to protect tech platforms from being held liable for their users’ content. It also allowed platforms in the burgeoning tech industry to engage in good faith content moderation without taking on responsibility for their users’ posts.
It is considered to be one of the key pillars of the modern internet. The tech industry has long held that Section 230 is what enables players like Facebook and Google to continue running their businesses without fearing a deluge of costly, petty lawsuits. The law is even more important to smaller tech start-ups, larger platforms argue, that can’t bear the cost of such legal expenses.
But in recent years, Section 230 has garnered criticism from Republicans and Democrats alike who believe its protections are now outdated as tech platforms have grown to become some of the most valuable companies in the world. The law has also become a target for President Donald Trump, who issued an executive order this summer directing the Federal Communications Commission to create new rules on Section 230 protections and the Federal Trade Commission to take action against companies engaging in “deceptive” acts of communication. The order, however, has little power without action from Congress.
The new Republican bill would primarily revise three aspects of Section 230:
- It would narrow the scope of the types of content that tech platforms could not be prosecuted for removing. Currently under Section 230, platforms have a long leash to limit the reach and availability of any “material that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable, whether or not such material is constitutionally protected.” But under the new bill, “otherwise objectionable” would be replaced with specific categories of content that is “promoting self-harm, promoting terrorism, or unlawful.”
- It would seek to remove subjective judgement by tech platforms on what types of content falls into these buckets by replacing the standard of what the platform “considers to be” objectionable to what it “has an objectively reasonable belief is.”
- It clarifies the definition of an “information content provider” as any person or entity that “editorializes or affirmatively and substantively modifies the content of another person or entity” besides cosmetic changes to the format or layout of the content. That could deny 230 protections to platforms that delete user comments that are not covered by the Good Samaritan clause, for example.
Blackburn said the reasonableness standard and more specific language is meant in part to address bias in content moderation. Blackburn and other conservatives have repeatedly accused tech companies of building biased algorithms or employing moderators whose choices reflect their own leanings. While tech companies have apologized for several incidents in which content was mistakenly or unfairly removed, they’ve held that their moderation practices are consistent with their policies.
“We know that there are not going to be other alternatives to these platforms until we get these liability protections brought up to date, and we also think that there is not going to be accountability for bias until we get this brought up to date,” Blackburn said.
But narrowing the scope of what can be considered “objectionable” content could make it more risky for tech platforms to remove borderline content or content that falls into a gray area of the law. For example, while there are laws that prevent companies from promoting products with false health claims, they likely wouldn’t prevent a celebrity from sharing provably bogus health information that could pose a danger to their followers. While unforeseen circumstances can always happen, Blackburn said the categories in her bill would cover much of the harmful content shared online.
“Through the growth, development, evolution of the online space, is it conceivable that something else at a future date would be added? Of course,” Blackburn said. “What this does is take away the generality and putting in its place something specific because one of the objections that we’ve heard regularly and one of the shields that Big Tech would use is to say, ‘Well, our content moderators considered this to be objectionable.’ So to begin to put some language in place that is more definitive is, I think, a step in the right direction.”
Carl Szabo, vice president and general counsel of the tech industry group NetChoice, said the bill would prevent tech platforms from removing exactly the type of content Congress has warned them about.
“This bill would thwart social media’s ability to remove Russian or Chinese election interference campaigns, misinformation about Covid-19, and cyberbullying from their services,” said Szabo, whose members include Amazon, Facebook, Google, TikTok and Twitter. “Furthermore, the bill would prevent online services from removing the very content Congress demands they remove – notably medical misinformation and efforts to undermine our elections.”
Blackburn brushed off such criticisms from the industry as nitpicking. She said much of content people would worry about would fall under the terms included in the bill and said her focus was on bringing a bill that would revise Section 230 without repealing it.
“What I was seeking to do is to modify this and bring it to a point that we can get agreement and we can reform and not repeal because our innovators in this space are still going to need Section 230 protections,” Blackburn said, highlighting the need to give new innovators opportunities to benefit from protections that give them a chance to compete with the dominant players.
But such specificity could prevent many Democrats from getting on board with the bill, which is notably missing any Democratic co-sponsors. While Blackburn said she’s confident it will receive bipartisan and bicameral support, Democrats have pressed tech platforms throughout the election cycle to apply more fact-checks on medical misinformation and misleading election content and have shrugged at accusations of bias.
Several other bills reforming Section 230 have been introduced or are in the works. Graham introduced a separate bill, the EARN IT Act, with Sen. Richard Blumenthal, D-Conn., which would tie the liability protections to efforts to report child sexual abuse material. Industry critics claimed the bill would undermine encryption that protects users’ privacy, but the bill passed in the Judiciary Committee with a unanimous vote in July with amendments that watered down, but failed to eliminate, some of their concerns.
Facebook is struggling with speech rules before 2020 elections, and that could give lawmakers new ammo
Nikol Szymul staffs a reception desk at Amazon offices discretely tucked into a building called Fiona in downtown Seattle, Washington on May 11, 2017.
The coronavirus pandemic has wreaked havoc on the U.S. jobs market, spurring layoffs, hiring slowdowns and record unemployment rates, but Amazon‘s latest hiring announcement tells a different story.
Amazon said Wednesday it’s looking to fill 33,000 corporate and technology jobs over the next few months, plus thousands of hourly roles in its operations network. An Amazon spokesperson said the corporate and technology jobs will be located across the country, not just in major cities. The technology jobs will support Amazon’s cloud-computing, Alexa and Prime Video teams, among others.
The company has been on a hiring spree since the pandemic began. Amazon hired 36,400 people in the three months ended June 30, bringing its headcount to 876,800, an increase of 34% year over year. That number is expected to reach 1 million employees around the world, a major milestone, once Amazon permanently hires some of the temporary workers it brought on during the pandemic. It also plans to add 3,500 jobs in a handful of U.S. cities, while it continues to staff up its U.S. and international campuses.
Amazon has long been one of the biggest employers in the tech industry and is the second-largest employer overall in the U.S., behind Walmart. It has also been one of the biggest beneficiaries of the pandemic, with shoppers flocking to the online retailer for necessities like face masks and hand sanitizer, as well as groceries.
The company became so overwhelmed with online orders that it hired 175,000 new people to help pick and pack items in its warehouses. Those investments ended up paying off in Amazon’s blowout second-quarter results, when it reported record profits and revenue.
By comparison, companies in and outside of the tech industry have been gutted by the coronavirus. Struggling retailers like J.Crew, Neiman Marcus and J.C. Penney have all filed for bankruptcy, while the travel and airline industries are reeling from the pandemic.
Tech companies big and small have pulled back on hiring and announced layoffs. As of Wednesday, more than 560 tech start-ups have cut roughly 78,900 jobs since March 11, according to Layoffs.fyi, which tracks job cuts in the tech start-up industry. Uber, Airbnb, Yelp and TripAdvisor were just a few of the tech companies that have shed jobs in recent months in order to cut costs.
Unsurprisingly, Amazon and other big tech stalwarts like Apple, Facebook, Google and Microsoft have proven to be largely resilient during the coronavirus crisis. Many of them have continued to boost the size of their staff in recent months and added billions of dollars to their market caps since the beginning of the year.
The six biggest tech stocks have lost more than $1 trillion over the last three days alone, but it’s really just a dent coming off a huge rally that peaked last week.
Apple, which hit a $2 trillion market cap on Aug. 19, is down about $325 billion in that time period. Microsoft‘s down $219 billion, Amazon fell $191 billion, Alphabet cratered by $135 billion, and Tesla, which fell 21% on Tuesday to mark its worst single-day loss in its history, is down $109 billion in the last three days. Finally, Facebook is off by $89 billion.
“In general, if you think about the market cap loss over the last 3 days for Apple, it’s about $325 billion. To help put that in perspective, that’s about 1.5 Salesforces, and equivalent to Apple’s projected revenues for the next calendar year,” Jefferies’ Jared Weisfeld told CNBC’s “Fast Money” on Tuesday.
Despite the huge number, it’s worth keeping in perspective given the tech giants’ massive rise in value this year.
At the beginning of 2020, the six largest tech companies were worth about $5 trillion. On Wednesday, Sept. 2, they peaked with a value of $8.2 trillion. After Tuesday’s close, they have a combined market cap of $7.1 trillion. While it’s a big loss over a few days, these six companies are still worth $2.1 trillion more than they were at the beginning of the year — despite the global coronavirus pandemic and record job losses in the U.S.
“I certainly haven’t sensed any panic with clients and investors I’ve spoken with over the past couple of days… but no doubt about it the large cap tech has led us lower and today’s action was certainly dramatic evidenced by Apple dropping below the $2 trillion market cap,” Weisfeld said.