I used to think Wall Street is very evil at sucking up the wealth of the rest of the country to line up the pockets of themselves while creating no real value. Nowadays I am pondering whether Silicon Valley is guilty of similar practices.
We see companies like Twitter, Salesforce, Netflix, etc goes IPO and commands a ridiculous valuation while having paltry profit/revenue under the name of "growth stocks", while suburban moms in mid-west buy those stocks up because they read about them on CNBC.
Then the founders/VCs cash out big time and then use the money to prop up the next series of startups, then rinse wash repeat. How much of this is sustainable? Maybe once in a blue moon a company with P/E of 500 is justified because they MAY be the next Google or Apple or Microsoft (ironically, none of those companies ever traded at that kind of P/E themselves, oh my..the days of only taking your company public AFTER you started making tons of money...), but these days when that kind of growth expectation is the norm then obviously most of them are in for a big crash in the future, since we aren't going to have a "next Google" every 6 months.
I wonder if this bubble will deflate slowly or crash and burn like it did back in early 2000s.
Sigh...I'm in my mid-20s and I actually work in SV but I already sound like a old geezer when talking to some of my peers about the tech industry's near term prospects.
We see companies like Twitter, Salesforce, Netflix, etc goes IPO and commands a ridiculous valuation while having paltry profit/revenue under the name of "growth stocks", while suburban moms in mid-west buy those stocks up because they read about them on CNBC.
Then the founders/VCs cash out big time and then use the money to prop up the next series of startups, then rinse wash repeat. How much of this is sustainable? Maybe once in a blue moon a company with P/E of 500 is justified because they MAY be the next Google or Apple or Microsoft (ironically, none of those companies ever traded at that kind of P/E themselves, oh my..the days of only taking your company public AFTER you started making tons of money...), but these days when that kind of growth expectation is the norm then obviously most of them are in for a big crash in the future, since we aren't going to have a "next Google" every 6 months.
I wonder if this bubble will deflate slowly or crash and burn like it did back in early 2000s.
Sigh...I'm in my mid-20s and I actually work in SV but I already sound like a old geezer when talking to some of my peers about the tech industry's near term prospects.