Revenue and profit are different things. In times of low interest it’s growth at all costs. Investors love market share and growth, because they expect to make money when they sell their shares. That’s risky, but with low, no, or even negative interest it’s still worth the risk.
When interest goes up, parking money in safe, interest-based forms of investment becomes more interesting, so to compete companies also need to lower the risk. In a climate like that investors want to make money via dividends, so companies need to maximize dividends and to do so they need to maximize profits. Growth, market share and future plans become less relevant.
Revenue and profit are different things. In times of low interest it’s growth at all costs. Investors love market share and growth, because they expect to make money when they sell their shares. That’s risky, but with low, no, or even negative interest it’s still worth the risk.
When interest goes up, parking money in safe, interest-based forms of investment becomes more interesting, so to compete companies also need to lower the risk. In a climate like that investors want to make money via dividends, so companies need to maximize dividends and to do so they need to maximize profits. Growth, market share and future plans become less relevant.
That’s what we are seeing right now.