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by ShuffleBoard
1150 days ago
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Sure; every company effectively does, by way of the "cost of capital:" https://online.hbs.edu/blog/post/cost-of-capital#:~:text=Wha.... But regardless of whether any big tech co. needs loans or not, the cost of any investment they make, as well as the referred-to-present value of any payoff from it, are anchored to the interest rate. And the recent upward movement in the interest rate -- not to mention high inflation -- has drastically (relative to the ~0% interest days) raised the costs and lowered the payoffs. Tech (both Big Tech & startups) is also getting hammered hardest first here mostly because those are the ventures that attracted investment of the lion's share of 0%-minted dollars, and that investment is vaporizing at the same time that the ROI (payoffs - costs) on lots of those firms' WIP has gone negative. |
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