Wednesday proved to be a dismal session for capital markets. As expectations for Federal Reserve interest rate hikes continued to intensify, technology stocks faced a broad sell-off. SpaceX shares plunged nearly 5%, with its market capitalization once again being overtaken by Amazon. However, at least SpaceX had experienced a significant rally just prior; software giants like Microsoft, Salesforce, and ServiceNow saw their shares plummet in sync by 4% to 5%, adding to the heavy downward pressure already weighing on these stocks.
A rebound in late spring had allowed SaaS software stocks to recover most of their winter losses, but as June began, the software sector plunged back into what some are calling a SaaS doomsday scenario. As of Wednesday's close, Salesforce is down 41% year-to-date, ServiceNow has fallen 38%, and Microsoft has dropped 21.6%, ranking it the worst performer among major tech companies.
According to data from financial platform Koyfin, the second-largest year-to-date decline among major tech stocks belongs to metaverse platform Meta, down 14%, with Tesla in third place with an 11.9% drop. Although Tesla's 2025 revenue is projected to be five times that of SpaceX, its current market cap is only 59% of the latter's. If Elon Musk were to pursue a merger of Tesla and SpaceX, determining the appropriate share exchange ratio would pose a significant challenge.
Snap's Smart Glasses: A Public Relations Fiasco
One question is drawing significant market attention: If Snap ultimately announces, as seems likely, the discontinuation of its newly released AR smart glasses, what scale of asset impairment loss will the company need to recognize? Since the social media company unveiled the product on Tuesday, online commentary has been almost universally mocking. Already mired in a stock slump, Snap came under further pressure, closing down 8% on Wednesday at $4.74 per share.
The overwhelmingly negative reception stems from three primary reasons: the exorbitant price of $2,195 per pair; the heavy weight of the device, with different models weighing 132 grams and 135 grams compared to Meta's Ray-Ban smart glasses at just 48-50 grams; and the widely criticized design. A video circulating online of Snap CEO Evan Spiegel wearing the glasses has drawn particularly harsh aesthetic judgments.
While some tech reviewers offered neutral or slightly positive assessments, they unanimously agreed the product is not viable for the mass consumer market. One prominent tech media outlet suggested the glasses might only find a place in art museums, theme parks, or pop-up experience stores for visitor trials. Spiegel's vision is that these glasses will reshape computing interaction, freeing people from their phone screens. However, this vision is unlikely to be realized by this product in the near term.
It's undeniable that Snap entered the AR smart glasses arena earlier than competitors like Meta, whose Ray-Ban smart glasses have already found market success. But if this new product ultimately sells poorly, that first-mover advantage will prove worthless.
Many long-time investors recall a similar debacle for Snap: in 2017, the company took a $40 million write-down on unsold inventory of its first-generation camera glasses. Back then, Spiegel suggested the hardware business might take a decade to become a core growth driver for Snap. Nine years later, hardware has yet to alter the company's fundamental trajectory. Snap's revenue remains heavily reliant on advertising, a segment where its growth lags not only behind giants like Meta but also smaller peers. The new smart glasses are highly unlikely to change this situation.
Other Industry Developments
SpaceX disclosed in a regulatory filing on Wednesday that it has officially appointed Roelof Botha, a senior partner at Sequoia Capital—a major investor in SpaceX—to its board of directors.
Reports indicate Microsoft plans to integrate the fourth-generation large language model DeepSeek V4 from Chinese AI firm DeepSeek as a cost-effective alternative model for its Copilot intelligent assistant.
The conservative-leaning video platform Rumble, positioned as an alternative to YouTube, completed a stock-swap acquisition on Wednesday, taking over data center firm Northern Data. This move formally enters Rumble into the hot market for Nvidia GPU computing power leasing, making it another player in the AI infrastructure services space.
Apple CEO Tim Cook indicated that due to significant cost increases for memory chips, the company plans to raise product prices to offset the cost pressure.
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