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Silicon Valley's Tech Bubble Is Now Larger Than In 2000. Will It Come To An End? (cnbc.com)

Posted by ryuzaki0 on from the toil-and-trouble dept.

"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.

4 of 144 comments (clear)

  1. Whole lotta money going on... by ColdWetDog · · Score: 3, Insightful

    Bottom line (sorry) - there is a metric shitload of capital out there waiting to make more capital. Since that's all that kind of person (or corporation, but I repeat myself) really worries about.

    It's ALL about dealing with increasing growth. Which then becomes an exponential function.

    Which, in the real world, typically don't end well.

    --
    Faster! Faster! Faster would be better!
    1. Re:Whole lotta money going on... by b0s0z0ku · · Score: 5, Insightful

      Disagree. I don't need a smartphone to hail a taxi. Built-in equipment (i.e. my hand) will do. I can pay cash and not have my origin and destination tied to a name, CC#, email, phone, and address in a database. True, I might be photographed, but facial recognition isn't typically used for those photos unless a crime was committed.

  2. Bubble or not, we are DUE for a correction by Tablizer · · Score: 3, Insightful

    This is the second longest the US has gone without a recession, per the roughly decade-long "business cycle" that's been recurring more or less since the end of the Civil War. Thus, something will probably happen within a year or two. The only real question is how big the downturn will be, and what sectors will be most affected.

    --
    Table-ized A.I.
  3. Re:Of course... by Anonymous Coward · · Score: 2, Insightful

    Profitability is so ... common.

    We need more companies like Theranos, Uber, Tesla ... the profitable companies you probably haven't heard off.

    If I were on an investment website, I'd laugh. But here on Slashdot, I don't know if you're serious or not.

    There are still plenty of people who will insist that Tesla isn't losing money because they are "building up" - even though Musk NEVER said such a thing - ever.

    He has used the "building up" excuse for the negative cash flows from investing, but that's it. He NEVER said that Tesla wasn't losing money - ever.

    The TTB - Tesla True Believers - have become just as delusional as any religious cult.