Music streaming giant Spotify (SPOT.N) said on Monday that it will lay off around 1,500 employees, or 17% of its headcount, to bring down costs, after letting 600 of its staff go in January, and 200 more in June.
After a round of job cuts at the start of the year by tech companies, some have begun reducing their workforce again, with announcements coming from Amazon to Microsoft-owned LinkedIn.
In a letter to employees, Spotify CEO Daniel Ek said the company hired more in 2020 and 2021 due to the lower cost of capital and while its output has increased, much of it was linked to having more resources.
In the third quarter, the company swung to a profit, aided by price hikes in its streaming services and growth in subscribers in all regions, and the company forecast that its number of monthly listeners would reach 601 million in the holiday quarter.
Ek told Reuters at that time the company was still focusing on efficiencies to get more out of each dollar.
On Monday, he said a reduction of this size would feel large given the recent positive earnings report and its performance.
"By most metrics, we were more productive but less efficient. We need to be both," Ek said.
"We debated making smaller reductions throughout 2024 and 2025," Ek said. "Yet, considering the gap between our financial goal state and our current operational costs, I decided that a substantial action to rightsize our costs was the best option to accomplish our objectives."
Bitcoin has broken above $40,000 for the first time this year as it rides a wave of momentum on broad enthusiasm about U.S. interest rate cuts and as traders anticipate the imminent approval of U.S.-stockmarket traded bitcoin funds.
The world's biggest cryptocurrency hit $41,522 on Monday, its highest since April 2022, and has seemed to cast off the funk that had settled over crypto markets since the collapse of FTX and other crypto-business failures in 2022.
A 50% rally since mid-October has "seemed to mark a decisive shift away from the bearishness of 2022 and early 2023," said Justin d'Anethan - head of business development for Asia-Pacific at Keyrock, a digital assets market-making firm.
He said evidence of institutional buying through November showed a new leg of interest and that although reversals ahead are not inconceivable, lows hit around $16,000 a year ago "probably marked the bottom".
Bitcoin investor Microstrategy (MSTR.O) last week disclosed it bought an additional $593 million in bitcoin during November.
Bitcoin coins are seen at a stand during the Bitcoin Conference 2023, in Miami Beach, Florida, U.S., May 19, 2023. REUTERS/Marco Bello/File photo Acquire Licensing Rights
Meanwhile, riskier investments and other interest-rate sensitive assets, such as gold, have also rallied hard over the last few weeks as markets wager that the U.S. Federal Reserve has finished hiking rates and will start cutting early in 2023.
Reports in October that the U.S. Securities and Exchange Commission won't appeal a court ruling that found the agency had been wrong to reject an exchange-traded fund application have also driven bets that an eventual approval is nigh.
A spot bitcoin ETF could allow previously wary investors access to crypto via the stock market, ushering a new wave of capital into the sector.
Ether, the coin linked to the Ethereum blockchain network, also made a 1-1/2 year high on Monday, hitting $2,253.
Both bitcoin and ether remain well below their 2021 record highs were above $60,000 and $4,000 respectively.
The decision by McDonald's (MCD.N) to take greater control of its China business and expand aggressively in the face of a consumer slowdown and geopolitical tensions seems risky - but the potential pay-off is great, analysts say.
Last month, the U.S.-based burger maker cut a deal to repurchase the 28% stake in its China business Carlyle Group took in 2017, giving it a 48% share in $6 billion worth of operations that include Hong Kong and Macau.
The move contrasts sharply with the prevailing trend of multinational corporations reeling back investments in China or even exiting altogether because of geopolitical and economic challenges.
One advantage for McDonald’s: its majority partner in the China business, CITIC, provides top-level political cover, said Jason Yu, Greater China managing director of market research firm Kantar Worldpanel.
"Having a very powerful Chinese state-owned conglomerate as a partner means they are not going to be at the forefront of the geopolitical situation; that is quite important," Yu said.
McDonald's China, Carlyle Group, and CITIC declined to comment.
Other consumer-facing U.S. firms, including Starbucks (SBUX.O), Apple (AAPL.O), Coach owner Tapestry (TPR.N), and sportswear giant Nike (NKE.N), have remained similarly dedicated to the China market.
Starbucks and Nike, which face increased competition from lower-priced domestic competitors, show the need to stay agile in order to protect and grow market share, analysts say.
The coffee giant is sticking with expansion plans and launched a smaller cup size; Nike, by contrast, has offered localised, higher-end sneakers such as its "Year of the Rabbit" Dunk Lows.
McDonald’s has used funds from the Carlyle investment to double its restaurant count since 2017 to 5,500, and the country has become its second-largest market. The business aims to have more than 10,000 stores in China by 2028.
Competitors of McDonald's are also expanding their reach in China.
Yum China, which operates KFC and Pizza Hut, among other brands, already has more than 14,000 stores across the country. Among domestic players, chicken burger specialist Wallace said in 2021 that it had reached 20,000 stores, and newer entrant Tastien, which specializes in "Chinese-style" burgers, has more than 3,500 stores.
To be sure, if relations between China and the West worsen, any optimism could evaporate, said Greg Halter, Director of Research at investment advisory firm Carnegie Investment Counsel.
"If tensions deteriorate, we may see not only McDonald's, but other companies divest their Chinese operations, similar to what has occurred in Russia over the past two years," Halter said.
Further digitalisation and localisation are needed, Yu said, with localisation key to winning over taste buds in China's $140.2 billion limited-service restaurant sector.
Although the McDonald's China menu would be familiar to U.S. consumers, there are nods to local tastes, including taro pie, rather than apple.
According to Euromonitor, the market value of limited-service restaurants in China is on track to grow about 4% annually on average through 2025. Of the limited-service burger-focussed restaurants in the country, McDonald's dominates with a 70% share of the market.
China's slowing economic growth and lackluster consumer spending this year have already hurt the bottom lines of global businesses exposed to its consumer market, but McDonald's is well-placed to outperform, said Ben Cavender, the Shanghai-based managing director and head of the strategy at China Market Research Group.
He said value-driven middle-class consumers and lower commercial rents countrywide should be a boon to such businesses.
"If ever there was a time to double down on China, this is it," he said.
Oil futures reversed course after rising briefly on Monday amid persistent pressure from the OPEC+ decision and uncertainty over global fuel demand growth, although the risk of supply disruptions from the Middle East conflict limited the losses.
Brent crude futures were down 0.9%, or 73 cents, to $78.15 a barrel by 0735 GMT, while U.S. West Texas Intermediate crude futures were at $73.43 a barrel, down 0.8%, or 64 cents.
"Crude seems to be under continued pressure from the OPEC+ decision ... Some degree of discounting of the deeper OPEC+ cuts is justified, but as of now, the crude complex has completely disregarded them," said Vandana Hari, founder of oil market analysis provider Vanda Insights.
Oil prices slumped more than 2% last week on investor skepticism about the depth of supply cuts by the Organization of the Petroleum Exporting Countries and allies including Russia, together called OPEC+, and concern about sluggish global manufacturing activity.
OPEC+ cuts announced on Thursday were voluntary in nature, raising doubts about whether or not producers would fully implement them. Investors were also unsure about how the cuts would be measured.
Geopolitical considerations were also front and center of investors' minds as fighting resumed in Gaza. Three commercial vessels came under attack in international waters in the southern Red Sea, the U.S. military said on Sunday, as Yemen's Houthi group claimed drone and missile attacks on two Israeli vessels in the area.
The resumption of the Israel-Hamas war fuelled the bullish momentum for oil prices, CMC Markets analyst Tina Teng said.
"However, oil prices may continue to be under pressure for the time being due to China’s disappointing economic recovery and the ramp-up of U.S. production," Teng said.
U.S. oil rigs rose five to 505 this week, their highest since September, energy services firm Baker Hughes (BKR.O) said in its closely followed report on Friday.
On Russian oil, western countries have stepped up efforts to enforce the $60 a barrel price cap on seaborne shipments of Russian oil it imposed to punish Moscow for its war in Ukraine.
Washington on Friday imposed additional sanctions on three entities and three oil tankers.
Separately, the White House said on Friday it was prepared to "pause" sanctions relief for OPEC member Venezuela in the coming days unless there is further progress on the release of Venezuelan political prisoners and "wrongfully detained" Americans. Meanwhile, India has resumed Venezuelan oil purchases.