Slashdot Mirror
Silicon Valley's Tech Bubble Is Now Larger Than In 2000. Will It Come To An End? (cnbc.com)
"We are now officially in a tech bubble larger than March of 2000," argues Keith Wright, instructor of accounting and information services at the Villanova School of Business. An anonymous reader quotes his commentary on CNBC:
In case you missed it, the peak in the tech unicorn bubble already has been reached. And it's going to be all downhill from here. Massive losses are coming in venture capital-funded start-ups that are, in some cases, as much as 50 percent overvalued... 76% of the companies that went public last year were unprofitable on a per-share basis in the year leading up to their initial offerings, according to data compiled by Jay Ritter, a professor at the University of Florida's Warrington College of Business, and recently featured in the New York Times. This is the largest number since the peak of the dot-com boom in 2000, when 81 percent of newly public companies were unprofitable...
Several financial models project that up to 80 percent of unicorn companies are set to fail within two years. Uber, the highest-valued private technology company, has rapidly growing revenue but remains highly unprofitable. With revenue of $6.5 billion in 2016, it still registered a net loss of $2.8 billion. The truth is, when a unicorn is overvalued, it doesn't take long for the market to discover this fact.
Several financial models project that up to 80 percent of unicorn companies are set to fail within two years. Uber, the highest-valued private technology company, has rapidly growing revenue but remains highly unprofitable. With revenue of $6.5 billion in 2016, it still registered a net loss of $2.8 billion. The truth is, when a unicorn is overvalued, it doesn't take long for the market to discover this fact.
End-to-end, the Uber experience is superior in every way (for the customer) than a "licensed" cab. The established players failed to innovate, and now are crying foul.
The "bubble" is not in the profitability of the companies. It is in their valuation on the stock, bond and VC markets, which has been driven in large part by the cut in capital gains taxes and cuts in marginal rates for the investment class.
When you hear about a tech "bubble", don't think, "companies are making more money than they should". Instead, think, "companies are being valued higher than they should".
You are welcome on my lawn.
In the US that works in 1 city- New York. And even then only really in Manhattan. If you live in a suburb, or in Queens, and you're trying to flag a cab down I hope you have a few hours. Even in Chicago there isn't a sufficient mass of cabs anywhere other than downtown to make that work.
I still have more fans than freaks. WTF is wrong with you people?