Mad Hedge Technology Alerts! 

CEO’s are toast as the CEO turnover tally starts to explode at the end of 2024.

There appears to be a strong trend that will grow in 2025, and that is corporate tech companies looking to the bullpen to substitute out the CEO.

They aren’t doing enough for their respective companies, and that needs to change.

This speaks volumes to the tough times in which debt has become too expensive to fund growth.

Tech companies have always played by the idea of the “winner takes all” mentality, and 2024 underscored this trend by seeing the likes of the Magnificent 7 grow in size and stature.

Through October, more than 1,800 CEOs have announced their departures this year. The outperformance of big tech stocks means that shareholders are putting massive pressure on management to juice up their own stock prices.

The number of exits is up 19% from the more than 1,500 departures during the same period last year, which was the previous year-to-date record.

Boards of directors are becoming impatient and ambitious, holding their CEOs accountable for underperformance — both in terms of profits and stock price.

The expected length of tenure as a CEO, on average, is declining as a result of these performance pressures.

The massive stock market gains of the past two years — the S&P gained roughly 20% in 2023 and is set to gain more than that by the end of 2024 — also pose challenges to US companies.

The outperformance of big tech is forcing shareholders to lean into their own management and demand answers to why they are falling behind.

The answer is complicated, and I acknowledge that many CEOs aren’t in the position to throw around capital like the CEO of Apple, Tim Cook, or CEO of Meta Zuckerberg.

These leaders can chase the next big thing and can strike out many times and not even bat an eyelid.

High turnover shows growing risk appetites and "a desire for leaders who can navigate increasing complexity in the macro business environment, including tech transformation, sustainability, geopolitical crises, and social issues."

If a company’s figurative boat is sinking while most others are enjoying a rising tide, corrective action must be taken by the CEO and or the Board.

If the CEO doesn’t have a clear plan for a turnaround, the Board finds someone who has a plan and the strength to execute that plan. It doesn’t matter if the CEO is actually at fault. Blame is assigned, and heads roll. It isn’t always fair.

Many of these tech CEOs cannot just issue dividends or execute stock buybacks to manipulate the share prices higher.

I believe these shareholder returns will be a key tool for big tech to jump over the low bar after a bevy of lower-than-expected guidance.

Next year, we could experience the haves and have nots in tech separate from each other even further.

Many of these hot chip names are right in the middle of their growth curves. 

Software stocks still look good on the dips.

Lately, there were selloffs in cyber security stocks like Palo Alto Networks (PANW) and CrowdStrike (CRWD).

Traders bought the dip after weak guidance, and this is an example of where there is an opportunity as a trader to get in at optimal entry points.