UNITED STATES—Has Elon Musk sparked a mass exodus from Silicon Valley? Although the inimitable billionaire still has ongoing interests in California, he’s made it clear that relocating Tesla’s HQ to Texas is a distinct possibility. He’s now spending more time at the company’s new facility there and, potentially, may make that Tesla’s main factory. In the wake of Musk’s decision, it emerged that Oracle and Hewlett Packard are also leaving Silicon Valley for pastures new. Is this the start of a mass exodus? If so, why, and will other companies join the rush?
Musk may have triggered others to leave or, at least, added fuel to already raging fires. However, it isn’t the only reason to think an exodus is possible. For all of its lockdown measures, California is still suffering from a spike in COVID-19 cases. The state’s infection rate hit 1.3 million in December 2020, despite some of the toughest restrictions in the US. Businesses have been shuttered for months and, according to the UCLA Anderson quarterly forecast, unemployment hit 10.8% last year.
Opportunities Abound but Uncertainty Reigns
For astute investors, this opens up some opportunities. The Nadex™ demo account offers flexible trading strategies such as binary options. By speculating on the price movements, rather than investing directly in assets, investors can roll with the punches in volatile markets. Those wanting to speculate on Silicon Valley’s fortunes can also get expert support via the Nadex demo account. Daily updates, price data, and a virtual bankroll provide opportunities to test the market before jumping in during uncertain times.
Tech is Still Strong, but the Economy is Weak
Analysts have noted that jobs in technology “may be stronger in California” than those in other sectors. However, the local economy as a whole is suffering. There’s also the issue of high taxes and the cost of living, as noted by the Motley Fool’s Matthew Frankel. If wages can’t match the cost of living and California’s economy remains in a tough position, tech companies will struggle to attract new talent. Thus, relocating to another state that’s not only cheaper but more liberal in taxation (such as Texas), isn’t a bad idea for some.
Whatever reasons Oracle et al have for leaving Silicon Valley, we’ll be able to see whether it was a wise move thanks to the stock market. Silicon Valley stocks were a mixed bag in 2020. For example, Twitter shares fell by 35% ($34 to $22) between January and April. In contrast, Apple shares gained more than 40% over the year. Then there was the emergence of new players such as Zoom, which saw its shares rocket up by 425% as COVID-19 restrictions took hold. For all intents and purposes, 2020 was a strange year for Silicon Valley stocks.
Naturally, there are no guarantees when it comes to investing. However, what we do know is that 2021 is going to be an interesting year for the tech industry. Three major players are on the way out and more could follow. Add to this continued uncertainty caused by COVID-19 and the outlook is far from clear. Given that the fortunes of many tech companies rely on interest from investors, that’s important. If share prices are volatile, that could lead to fewer people investing and more changes at the top. We can’t predict the future, but we can say with relative confidence that the eyes of the world will be watching the performance of Silicon Valley stocks in 2021.