Scott Galloway, a serial entrepreneur, best-selling author and dynamic marketing professor at New York Univesity’s Stern School of Business, shared his updated over/underhyped sector list today at Schwab Impact 2022, and many professional investors would probably nod in agreement.
Overhyped: the democratization of investing, web 3.0 and space tourism.
Underhyped: telehealth and women’s health technology, the democratization of banking, new satellite technologies, supersonic travel and the search for antidotes to the loneliness crisis.
The context of his picks, he said, hinges on certain corporate behaviors he sees as being troublesome, and on his own perspective that the state of the economy isn’t so bad.
“This is like an Easter parade for me in terms of bad markets,” he said after demonstrating that over time, the markets seem to be returning to average, nothing worse. The people who are complaining are probably young and haven’t seen enough cycles, he said.
Meanwhile, there has been a lot of capital flowing to young companies with little justification. “In our economy, we have companies going public that aren’t profitable. It used to be one-third of the companies that went public weren’t profitable, now it’s two-thirds of the companies that go public,” he said.
“It’s become more about the story shape and the narrative,” he continued. “As a result, I think a lot of technologies are overhyped, while some are underhyped, because it’s difficult to find meaningful benchmarks for what the value of the company should be.”
The massive layoffs in the technology industry are the result of that capital flow, he said, which elevated everyone’s compensation expectations and pushed expenses to exorbitant highs.
“Here the workers are overeducated, overpaid, took some classes in coding, expect to make $180,000 out of college and want four or five days for pet bereavement,” he said. “I think those days are coming to an end.”
In particular, he pointed to Elon Musk suggesting that he could lay off as many as 75% of Twitter employees. When that happened, he said, “10,000 people at Pinterest, Snapchat and Meta also lost their jobs.”