Advertising spending has reduced over the past year, contributing to the woes of Meta Platforms. However, Sorrell says the ease in the crackdown from Beijing is a positive growth factor for the US tech stocks.
Martin Sorrell, the UK ad mogul and founder of the advertising agency, S4 Capital has weighed in on the potential of American tech stocks in the face of global economic distress. As by CNBC, Sorrell sees a good year for Facebook parent company(NASDAQ: META), as well as retail giant (NASDAQ: AMZN) and (NASDAQ: GOOGL).
According to Sorrell, Meta Platforms will rebound “extremely strongly this year” despite the fact that there are still some underlying economic headwinds to overcome. Sorrell believes the company’s efforts to thrive in the midst of top competition will be its most resourceful survival tactics in the near term.
“I think you’ll see Meta come back extremely strongly this year, on the back of reels and business messenger, to deal with the competition from TikTok and other short-form video competitors,” Sorrell told CNBC on the sidelines of the World Economic Forum in Davos, Switzerland.
Meta Platforms has been hit in a very different way over the past year with its shares plunging to its lowest since 2016 when it provided weak guidance when it released its 4th Quarter Earnings report. Meta has struggled with not just a dwindling valuation, but also of its operating profits and it made the tough decision to retrench as many as 11,000 of its employees or 13% of its entire workforce last November.
Thus far, tech giants have notably retrenched more than 60,000 workers, a sign of the broad-based strain that most of them have faced at a time when the interest rate has continued to grow significantly.
Martin Sorrell Sees Tech Stock Recovery
Besides Meta Platforms, Martin Sorrell is optimistic that other tech giant’s stocks also have what it takes to record a significant upshoot. On Google and Amazon’s potential, the ad mogul noted:
“Google had a solid year last year, and I think they’ll have a strong year this year. Amazon increased its advertising revenues from $31bn to $41bn, and I think [it] will hit $100bn in time, despite what you’re seeing in terms of jobs and hiring.”
Advertising spending has reduced over the past year, contributing to the woes of Meta Platforms. However, Sorrell says the ease in the crackdown from Beijing is a positive growth factor for the US tech stocks. He believes companies expanding into the United States will need the kind of platform and reach that is only offered by these mainstream companies.
Sorrell had a successful career with WPP Plc (NYSE: WPP) and he started S4 Capital when he left in 2018. He said his company’s clients have a more targeted focus for their ad spending this year and this borders on “topline growth in activation and performance” as well as in “reducing [the] cost of digital transformation.”