Mad Hedge Technology Alerts!
A slightly worrisome trend is emerging from the tech world and it has to do with the future of the American tech worker.
These employees could pose quite a conundrum to tech companies in the near future that could drastically affect the results they desire.
Something needs to change or there could be many open gaps that cannot be filled.
As the baby boomers age out of the job market and are replaced, it’s not necessarily the Millennial generation that is the big problem, it’s Gen Z.
Gen Z is more or less having a hard time committing to even an interview based on fresh data from digital recruitment sites.
As tech companies vow to make leanness mandatory, this doesn’t bode well for the volume of tech hiring for Gen Z who are in their 20s.
Remember when friends of friends could get Facebook management jobs only to sip on lattes all day at the in-house coffee bar, well, that job doesn’t exist anymore because even Facebook is ridding itself of the slack. Those jobs were mainly dominated by Millennials up until the pandemic and have vanished with the pressure of higher inflation.
No more hiring to make it look like tech companies are bigger than they are. Tech firms can’t afford it anymore.
Results matter now and the up-and-coming generation who were extremely coddled as teenagers are having a hard time coming to terms with reality.
Now Gen Z is treating their would-be employers like bad first dates and not showing up for scheduled job interviews or even their first day on the job without as much as a phone call.
Employment website Indeed found that job ghosting is rampant by Gen Z, with 75% of workers saying they’ve ignored a prospective employer in the past year.
A head-spinning 93% of Gen Zers told the global recruitment platform that they’ve flaked out of an interview.
Worse still, a staggering 87% managed to charm their way through interviews, secure the job, and sign the contract, only to leave their new boss stranded on the very first day.
Unsurprisingly, it’s having the opposite effect on businesses left high and dry: More than half of businesses surveyed have said that ghosting has made hiring a harder and costlier process.
Almost half of those surveyed said they plan on pulling a disappearing act again, with a third deeming it acceptable to do so before an interview.
However, unlike Gen Z who feel emboldened, older workers say they instantly regret it.
What’s more, while more than half of Gen Zers are repeat offenders, the researchers found that a candidate’s likelihood to ghost again decreases with age.
For many employers, Indeed’s data will finally confirm their suspicions that Gen Z has commitment issues.
Indeed found that the cost-of-living crisis has exacerbated ghosting, with around 40% of those surveyed admitting that they're more likely to ghost if they find a job offering better pay or a cheaper commute.
Tech companies are in a race against time to automate using AI, because dipping into the Gen Z talent pool could be not being able to fill staff numbers.
Even if Gen Z employees do get hired, they do tend to disappear without a trace quite quickly.
Either way, tech companies will need to find a solution for a young US workforce that isn’t Silicon Valley material.
AI is arriving at just the right time to save their bacon.
Mad Hedge Technology Letter
February 16, 2024
Fiat Lux
Featured Trade:
(THE RIDE SHARING KING OF TECH)
(UBER), (LYFT)
It’s hard to believe that Uber (UBER), the ride-sharing company, is where it’s at now and by that, I mean delivering profits.
It was just only a few years ago when burning money was something they were known for and beginning the next lender to fund them was a common request.
That was the era of cheap money where 0% interest rates created companies like Uber and this capital was the oxygen they needed to keep trying until they could make it work.
Much of the early years were characterized by a fierce competition with competitor Lyft (LYFT) offering subsidies to drivers.
Fast forward to today and they also have a sparkling food delivery business and are projected to continue to grow in the first quarter of 2024.
The company carved out a profit of $1.43 billion in the final three months of 2023, which included a $1 billion benefit from its equity investments as well as income from its operations.
The company has turned an annual profit once before, in 2018 on the back of its investments, but it wasn’t earning money from its operations until now.
The company’s performance in the last three months of 2023 suggests that demand for its ride-sharing and food-delivery services remains robust.
From 2016 through the first quarter of 2023, Uber bled cash close to $30 billion in operating losses.
The company posted its first quarterly operating profit in the second quarter of 2023. The company was founded in 2009.
It was also better than Lyft at responding to a sudden driver shortage after the economy reopened from lockdowns. That helped Uber gain market share.
Lyft is still twisting in the wind of mediocrity and has yet to post its first operating profit.
Uber expanded advertising on its app over the past year. It says it has continued to become more disciplined about spending on discounts to consumers and incentives to drivers. It says it has also become better at combining deliveries and reducing errors, which has improved its operational efficiency.
In the last three months of 2023, the company’s mobility revenue grew 34% and its delivery revenue expanded 6%, while its revenue from freight declined 17%.
After bottoming around $19 per share in the middle of 2022, the stock has been on a rampage and now sits nicely at over $81 per share.
No doubt the stock benefited from last year's slew of capital betting on the Fed to drop interest rates.
I even anointed Uber as my number 1 stock of 2023 and their performance delivered in spades.
What we are witnessing is the maturity of the company and I am not saying they are going to deliver profit back to the shareholder like a FANG, but the conversation will start and that should carry momentum.
The US economy is still going strong growing a few percentage points per quarter and that means US consumers are still spending and that is good for ride-sharing and food delivery.
Uber is sitting nicely as they are a monopoly in this area of technology services.
I am bullish Uber.
