Yelp! stock became the latest Silicon Valley darling in the week before Valentine’s Day to tank by double-digits, as big investors retaliated for the 50 percent stock drop since December by forcing the company’s CFO to resign.
Breitbart News warned on February 4 that January’s 218 percent surge over December in corporate layoffs, to 75,114 workers, was the highest level of after-Christmas job cuts since the brutal 241,749 layoffs at the depths of the 2009 global financial crisis.
But in what should serve as the proverbial “canary dying” in the Silicon Valley gold mine, 14,374 or about 20 percent of those corporate “pink slips” were concentrated among computer and telecommunications workers.
Just three months earlier, the Bureau of Labor Statistics had reported an all-time-record high of 5.4 millionjob openings in the United States, with tech staffing demand dominating recruiting interest.
According to Robert Haft corporate recruiters at the time, hot Silicon Valley demand spiked the median pay for tech worker by about a 38 percent premium over the national average. The median wages for Silicon Valley Software engineers hit $139,500, network engineers ticked up to $121,000, and research scientists were making about $116,000. Most Silicon Valley tech firms were also forced to provide luxurious benefit packages that included lots of time off and lucrative stock options.
Yelp proved to be a fabulous place for engineers in Silicon Valley to work when the company went public in 2012. Its IPO was priced at $15, but jumped 64 percent on the first day to $24.58 a share. Instantly, stock options made almost all the engineers at Yelp millionaires on paper.
Silicon Valley tech workers started collecting online crowd-sourced reviews that compared the benefits of working at different local companies (compared to Yelp) as the “five-star standard.”
Yelp’s stock closed on March 3, 2014 at $92,25. But over the last two years, despite a steady growth in unique monthly visitors to Yelp’s website, and a booming expansion in local advertising accounts, Yelp’s stock has fallen by about 80 percent.
For the company’s 2015 year-end quarter announced on Feb. 8, Yelp beat Wall Street analysts’ average estimates with earnings of 11 cents on $153.7 million in revenue, versus an expected loss of 3 cents a share on $152.3 million in revenue.
Despite what once would have been good news, Yelp’s stock tanked by over 13 percent in the next 24 hours to about $15 a share as panic selling caused Silicon Valley tech stocks to dive.
The latest move down also wipes out all those Yelp engineers who thought their paper stock option gains had made them millionaires.
In what Breitbart News suggests could be the beginning of a serious Silicon Valley recession, tech industry workers may suffer a wave of much worse layoffs than during the 2008 and 2009 Great Recession.
During that period, according to Wall Street analyst Chris Martenson, engineering talent could quickly transition to a large number of “fast-expanding private future behemoths,” like Facebook, Palantir, Uber and the like. He adds that established tech companies like Google, Netflix, and Amazon also continued to invest heavily in growing research and development during the recession.
But in the current job market for tech workers, there are no “ready stable of up-and-comers with similar potential to power through a recession.” Martenson believes that as the current Silicon Valley bubble pops, laid-off tech workers could face the type of grim abysmal job prospects as during the 2000 Dot-Com Bust.