Shopping retail clothes rack

Tech and media stocks have fallen over a cliff after the publication of first quarter earning reports, wiping close to €1 trillion in value in the last few trading days as companies acknowledge that the massive boom in online spending witnessed during the pandemic might be coming to an end.

Over the last two years, almost one in every five dollars was spent online, but consumers are increasingly opting to spend their money in the real world.

Shopify, an ecommerce giant, posted results showing a 22 per cent increase in sales in the first three months of the year – a good showing by most measures, but a far cry from the 110 per cent increase it posted a year prior.

With growth slowing for four quarters in a row, investors are responding by shedding the stock, leading to a drop in its share price of around 18 per cent. The company’s issues look set to continue too, executives warned.

Similarly, Amazon reported a drop of three per cent in online sales for the first quarter of 2022, while forecasting just three per cent sales growth in the current quarter. The result has been the single biggest one-day drop in Amazon’s shareprice since 2006.

Joining Shopify and Amazon are Etsy and eBay, which both lowered their sales foreceasts for the year, with no mention of any timeline for a return to the blockbuster profits registered during the pandemic.

Turning to media, Netflix is down 67 per cent since the beginning of the year, while Spotify’s stock price has cratered by some 55 per cent, both due to falling subscriber numbers.

However, importantly, data from leading payment processors Visa and Mastercard shows that people are not spending less money. They are just spending it offline, on long-awaited holidays, restaurants, and anything else that has been missing during the pandemic.

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