Mark Cuban Warns 4 Key Industries Could Crumble in the Next Recession

Billionaire entrepreneur Mark Cuban has weathered several recessions and believes another one is around the corner. Job losses will lead to lower revenue growth for many businesses, which could lead to an economic slowdown, but some industries are more at risk than others. Here are some of the key industries that Cuban says could collapse in the next recession.

“[The media is] Cuban said in a YouTube video that artificial intelligence may only make the situation worse. Traditional media companies are constantly competing for people’s attention because more attention translates into higher advertising revenue. However, the media industry has become fragmented, with the largest media companies struggling to compete with TikTok clips, social media influencers, and the endless algorithms of search engines like Google and YouTube.

Artificial intelligence exacerbates these concerns, making it easier for media companies to join the competition. These risks also extend to Hollywood, where movies and TV shows face increased competition from an endless supply of content.

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Cuban also told investors to stay away from restaurants, calling them bad investments, MoneyWise reported. Restaurants are known to operate on razor-thin margins, and if workers continue to demand higher wages, it may become more difficult for restaurants to attract the best local talent in a sustainable manner.

Rising food costs may also lead to more people cooking at home rather than going to restaurants to buy more expensive food. Chipotle is a victim of this trend, with third-quarter comparable sales rising just 0.3% year over year, according to a Chipotle press release. Chipotle’s growth rates are typically much higher, but Chipotle CEO Scott Boatwright said “ongoing macroeconomic pressures” are slowing the industry.

Cuban has often criticized DOGE for trying to do too much too fast rather than staggering layoffs. He expressed caution about relying on government spending, and DOGE adds another layer of unpredictability.

While some companies use government revenue as only a small portion of their total revenue, others rely on government revenue. If DOGE turns off the tap, companies that rely heavily on government spending may struggle to stay afloat.

Social media and e-commerce platforms can spread the word about your brand and products. Some are doing well because of the discovery capabilities of these platforms, but Cuban said these companies could fall apart in a recession.

“When I think about investments in companies, if you have any level of dependence on Amazon, that’s a negative,” he said in an X post.

The platform can raise fees and reduce merchants’ profits at any time, but merchants are powerless. An economic downturn will reduce overall revenue for these platforms, and the companies that create them may raise fees to make up for the drop in sales.

This has been happening to Etsy since the pandemic craze for e-commerce platforms subsided. According to a press release issued by Etsy, total merchandise sales increased 0.9% in the third quarter, and total revenue increased 2.4%. As fees and advertising costs are borne by sellers, Etsy’s revenue grows faster than total merchandise sales. These fees are classified as “service revenue,” generating an additional $210 million in revenue for Etsy. This figure is up 12.7% year over year, which shows how quickly fees can change for sellers if they rely on platforms.

The situation is even worse for public trading platforms, as they are obligated to generate profits for their investors. This imposes additional costs on sellers, and higher fees are a big reason for Etsy’s 10.9% decline in active sellers. Etsy attributed the decline to “seller setup fees implemented in April 2024.” The number of buyers also dropped 5%, so it’s possible Etsy is raising prices for sellers again.

This risk exists for any business that relies on others’ platforms to attract customers and generate sales. Businesses that are doing well on these platforms today may be gone within a year as profit margins are squeezed, algorithms become less popular, and other factors beyond their control.

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