In this article, we discuss 5 most important tech layoffs to watch. If you want to see more firms that recently laid off employees, check out 10 Most Important Tech Layoffs to Watch.
5. Warner Bros. Discovery, Inc. (NASDAQ:WBD)
Number of Hedge Fund Holders: 68
Warner Bros. Discovery, Inc. (NASDAQ:WBD) is a New York-based media company. On August 4, Warner Bros. Discovery, Inc. (NASDAQ:WBD) reported its Q2 2022 results, posting a GAAP loss per share of $1.50 and a revenue of $10.82 billion, falling short of Wall Street estimates by $1.20 and $1.04 billion, respectively. About 70 people are being laid off in the HBO and HBO Max team, representing 14% of the total staff, as parent company Warner Bros. Discovery, Inc. (NASDAQ:WBD) carries out cost savings after the recent merger. Up to 70% of HBO Max’s development staff could be dismissed.
On August 23, Citi analyst Jason Bazinet lowered the price target on Warner Bros. Discovery, Inc. (NASDAQ:WBD) to $21 from $29 and maintained a Buy rating on the shares after the Q2 results. The analyst continues to like Warner Bros. Discovery, Inc. (NASDAQ:WBD) due to its direct-to-consumer pivot and possible synergies from its recently concluded merger.
According to Insider Monkey’s Q2 data, 68 hedge funds were bullish on Warner Bros. Discovery, Inc. (NASDAQ:WBD), up from 47 funds in the prior quarter. The collective stakes in Q2 2022 increased to $2.30 billion from $791 million in the earlier quarter.
Here is what Argosy Investors specifically said about Warner Bros. Discovery, Inc. (NASDAQ:WBD) in its Q2 2022 investor letter:
“I purchased shares of AT&T (T) prior to its spin-off of Warner Bros. Discovery, Inc. (NASDAQ:WBD). Most people are probably familiar with AT&T. They are a major cellular service provider, and until recently owner of the Time Warner media assets, which include HBO, CNN, TNT, TBS, Cartoon Network, DC Comics and the Batman content brands, and more. At the time of my purchase, I estimated that the combined T/WBD assets traded at a 15% levered FCF yield, or 6x FCF. I also believe that WBD, which now has HBO Max, has future growth in front of it which was previously in doubt when Discovery was primarily tied to the declining cable television bundle. Since then, Netflix reported disappointing subscriber growth, which threw all streaming companies into disarray. WBD followed that news with a disappointing outlook on its business during its own quarterly earnings.
As a result, shares of WBD have declined nearly 40% since the spin-off. WBD now trades for 7x 2023E FCF and there is great potential for returns over the next few years as WBD pays down debt used to finance its merger combining Warner Brothers and Discovery and grows. We do not own a large position in WBD at present, but we may add to it over time.”
4. T-Mobile US, Inc. (NASDAQ:TMUS)
Number of Hedge Fund Holders: 96
T-Mobile US, Inc. (NASDAQ:TMUS) is a Washington-based firm that provides mobile communications services in the United States, Puerto Rico, and the United States Virgin Islands. T-Mobile US, Inc. (NASDAQ:TMUS) has recently laid off workers in its network operations and engineering division. The layoffs included managers and executives, and they were part of an organizational shift at T-Mobile US, Inc. (NASDAQ:TMUS).
On August 30, Morgan Stanley analyst Simon Flannery named T-Mobile US, Inc. (NASDAQ:TMUS) as a “Catalyst Driven Idea”, and he expects the company to declare board approval and commence a share buyback program with its Q3 earnings report in late-October or early-November. The analyst forecasts $12 billion in buybacks in 2023, and reiterated an Overweight rating and a $159 price target on T-Mobile US, Inc. (NASDAQ:TMUS) shares.
According to Insider Monkey’s Q2 data, 96 hedge funds were long T-Mobile US, Inc. (NASDAQ:TMUS), up from 91 funds in the last quarter. Andreas Halvorsen’s Viking Global is the leading position holder in the company, with 9.17 million shares worth $1.2 billion.
Here is what ClearBridge Investments Sustainability Leaders Strategy has to say about T-Mobile US, Inc. (NYSE:TMUS) in its Q4 2021 investor letter:
“As mentioned, the communication services sector has come under some pressure, and irrational pricing competition has negatively impacted wireless industry growth and profitability of late, weighing on T-Mobile. Faced with these headwinds, and with pressure from other wireless carriers and cable companies that could cause the company to cede share in subscriber growth in 2022, we exited our position in the fourth quarter.”
3. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 128
Apple Inc. (NASDAQ:AAPL) laid off several contract-based recruiters mid-August as it is implementing a hiring freeze and controlling costs. Apple Inc. (NASDAQ:AAPL) has let go of 100 contract workers, which is indicative that a slowdown is underway at the tech giant. The layoffs occurred at Apple Inc. (NASDAQ:AAPL)’s California, Texas, and Singapore offices.
On August 29, Wedbush analyst Daniel Ives maintained an Outperform rating on Apple Inc. (NASDAQ:AAPL) and a price target of $220 on the shares. He cited resilient demand for iPhone 14 ahead of its release next week on September 7. In particular, the analyst believes Apple Inc. (NASDAQ:AAPL) is expecting another heavy iPhone Pro and Pro Max mix shift, which is a strong positive for ASPs heading into 2023.
According to Insider Monkey’s data, 128 hedge funds were bullish on Apple Inc. (NASDAQ:AAPL) at the end of June 2022, compared to 131 funds in the prior quarter. Warren Buffett’s Berkshire Hathaway is the biggest shareholder of the company, with a position worth $122.3 billion.
In its Q2 2022 investor letter, Wedgewood Partners, an asset management firm, highlighted a few stocks and Apple Inc. (NASDAQ:AAPL) was one of them. Here is what the fund said:
“Apple Inc. (NASDAQ:AAPL) grew revenues +9%, driven by +17% growth in the Services segment. While iPhone revenues grew a modest +5%, it was on an exceptional year ago comparison of +66%. iPhone continues to capture most industry smartphone profits by focusing on high-end price tiers. Apple Inc. (NASDAQ:AAPL) is taking nearly two-thirds of the revenue share in the premium ($400 and above) smartphone segment. Further, most of the growth was driven by expansion in the “ultra-premium” price tier of $1000 or more per unit.[1] As we have highlighted in the past, Apple’s relentless focus on the development and integration between hardware (especially integrated circuits) and software continues to add significant value for customers of its products and services. We expect this favorable competitive dynamic to continue for the foreseeable future.”
2. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 252
Amazon.com, Inc. (NASDAQ:AMZN) announced recently that it intends to shut down two Baltimore delivery facilities and lay off 353 employees as a result. On July 28, Amazon.com, Inc. (NASDAQ:AMZN) reported its second quarter results, posting a loss per share of $0.20, missing market estimates by $0.32. The revenue of $121.23 billion outperformed Wall Street forecasts by $2.09 billion.
On August 24, Bernstein analyst Mark Shmulik reaffirmed an Outperform rating and a price target of $160 on Amazon.com, Inc. (NASDAQ:AMZN) shares. The analyst believes things “are looking up” in a constrained macro environment as “we move past tougher compares” and the company remains well positioned to regain e-commerce share in the second half of 2022.
Among the hedge funds tracked by Insider Monkey, Amazon.com, Inc. (NASDAQ:AMZN) was part of 252 public stock portfolios at the end of Q2 2022, down from 271 funds in the prior quarter. Ken Fisher’s Fisher Asset Management is one of the leading position holders in the company, with 48.6 million shares worth over $5 billion.
Here is what Vulcan Value Partners has to say about Amazon.com, Inc. (NASDAQ:AMZN) in its Q2 2022 investor letter:
“Amazon.com Inc. (NASDAQ:AMZN) has three components to its business model: online retail, cloud-based Amazon Web Services (AWS), and online advertising. We believe that the stock price has declined primarily due to its disappointing online retail results. Retail was extremely successful during COVID, and Amazon spent immensely to protect the consumer experience including buying extra inventory, buying inventory ahead of time, securing alternate shipping routes and adding extra warehouse space.
We believe this long-term behavior has been successful for Amazon as customer retention and engagement remain at high levels. Post-COVID, the company is in the process of rightsizing its cost structure, and it is facing a tough period of comparisons. The retail segment is the smallest contributor to our overall value. The majority of the company’s value is in AWS, which we believe is one of the best businesses in the world. AWS’ revenue is expected to be approximately $80 billion this year, which is nearly double the amount in 2020.
The company’s online advertising has turned into an attractive business that did not exist 15 years ago, and we estimate its revenue to be around $40 billion this year.”
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 258
Microsoft Corporation (NASDAQ:MSFT) laid off 1,800 employees in July, and let go of 200 more workers in the beginning of August, from one of its customer-focused R&D projects. On July 26, Microsoft Corporation (NASDAQ:MSFT) reported its Q2 results, posting an EPS of $2.23 and a revenue of $51.87 billion, falling short of Wall Street consensus by $0.07 and $493.37 million, respectively.
Guggenheim analyst John DiFucci initiated coverage of Microsoft Corporation (NASDAQ:MSFT) on August 11 with a Neutral rating and a $292 price target. While he believes Microsoft Corporation (NASDAQ:MSFT) can boost revenue and free cash flow, supported by upside in Azure and Office Commercial 365, he sees continued declines in Windows that are still “not fully reflected in consensus estimates,” the analyst told investors.
According to Insider Monkey’s data, Microsoft Corporation (NASDAQ:MSFT) was part of 258 hedge fund portfolios at the end of Q2 2022, compared to 259 funds in the prior quarter. Chris Hohn’s TCI Fund Management is one of the leading position holders in the company, with a stake worth $5 billion.
Here is what Ave Maria specifically said about Microsoft Corporation (NASDAQ:MSFT) in its Q2 2022 investor letter:
“Microsoft Corporation (NASDAQ:MSFT)’s cloud business is nearly half of the company’s revenue and the largest business in Microsoft, with Office 365 being the second largest. The cloud business helps customers save money, so it is somewhat recession-proof. Office 365 allows customers to purchase low annual subscriptions, as opposed to purchasing expensive license agreements every few years. This could keep the revenue stable in a tough economic environment. We believe the company will be able to maintain mid-teen revenue growth for the foreseeable future.”
You can also take a look at Best Defensive Stocks Under $50 and Best High-Yield Dividend Stocks for Retirees in 2022.
