Mark Cuban Warns 4 Key Industries Could Crumble in the Next Recession
Written by
Marc Guberti
Edited by
Rebekah Evans
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Billionaire entrepreneur Mark Cuban has navigated several recessions and he believes another one is on the way. Job losses translate into lower revenue growth for many businesses, which can cause an economic slowdown, but some industries are at greater risk than others. Here are some of the key industries that Cuban said can crumble in the next recession.
Media
“[The media is] the worst industry in the history of industries,” Cuban said in a YouTube video, adding that artificial intelligence (AI) may only make it worse. Traditional media firms have always fought for people’s attention, since more attention translates into higher ad revenue. However, the media industry has become fragmented and the largest media companies are struggling to compete with TikTok shorts, social media influencers and the endless algorithms of search engines like Google and YouTube.
AI fuels these concerns, making it easier for media companies to blend in with the competition. These risks also extend to Hollywood, since its films and TV shows face more competition from an endless supply of content.
Restaurants
Cuban also told investors to steer away from restaurants, saying that they are bad investments, according to MoneyWise. Restaurants are known for having narrow margins and if workers continue to demand higher salaries, it may be more difficult for restaurants to secure the best local talent in a sustainable way.
Rising food costs may also lead to more people making food at home instead of commuting to restaurants for more expensive food. Chipotle is a victim of this trend, as its comparable sales increased by only 0.3% year-over-year in the third quarter, according to a news release by Chipotle. Chipotle’s growth rates are normally much higher, but Chipotle CEO Scott Boatwright cited “persistent macroeconomic pressures” that are slowing down the industry.
Industries That Rely On Government Funding
Cuban has regularly criticized DOGE, saying that it attempted to do too much too soon instead of staggering the job cuts. He has expressed caution about relying on government spending and the unpredictability of DOGE adds another layer.
While some corporations only use government revenue as a small piece of total revenue, other companies depend on it. If DOGE turns the faucet off, companies that heavily rely on government spending may struggle to stay afloat.
Businesses That Depend On Another Company’s Platform
Social media and e-commerce platforms can spread the word about your brand and products. Some people do very well due to those platforms’ discovery features, but Cuban said these companies can fall apart in a recession.
“When I look at investing in companies, if you have any level of dependency on Amazon, it’s a negative,” he said in an X post.
Platforms can raise their fees and undercut merchants’ profits at any time and there isn’t much that the merchants can do about it. An economic recession would decrease overall revenue from these platforms and the companies that created platforms may raise their fees to compensate for lower sales volume.
That’s been happening with Etsy ever since the e-commerce platform’s pandemic boom faded. Gross merchandise sales increased by 0.9% in the third quarter, according to a news release by Etsy, while total revenue increased by 2.4%. Etsy’s revenue growth outpaced its gross merchandise sales because of fees and advertising costs that fall on sellers. Those expenses, grouped under “services revenue,” came to $210 million in additional revenue for Etsy. That figure is up by 12.7% year-over-year, demonstrating how quickly expenses can change for sellers if they rely on platforms.
It’s even worse for publicly-traded platforms, since they are obligated to deliver profits for their investors. That resulted in extra costs for sellers and higher fees are a big reason why Etsy saw a 10.9% drop in active sellers. Etsy attributed this drop to its “seller set-up fee implemented in April 2024.” Buyers also dropped by 5%, so it is possible that Etsy raises prices on its sellers again.
This risk is present for any business that relies on someone else’s platform to attract customers and generate sales. Businesses that are doing well on these platforms today may be extinct within a year due to squeezed profit margins, less love from the algorithm and other factors that are out of their control.
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