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Silicon Valley IPO wave: 2000 Internet bubble replay?

via:博客园     time:2019/4/3 11:34:17     readed:111

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Data show that in 2019 at least 5,000 technology practitioners may become millionaires after the company goes public.

Despite Dropbox and Spotify taking the lead in 2018, it has to be said that last year's technology stock IPO was only unsatisfactory. Due to concerns about the global economic slowdown, political uncertainty and stock market volatility, the technology stock market had fallen into a trough in the fourth quarter of last year.

Still, it's exciting that eight companies, Airbnb, Instacart, Lyft, Palantir, Pinterest, Postmates, Slack and Uber, will land on U.S. stocks in 2019, setting off another wave of technology listings.

Things are changing. For years, these companies have had ample cash supply from the private market and have opted to stay away from the prying eyes of public investors and analysts.

Facebook Peter Thiel, an angel investor, has said that a lot of great businesses are still private, and bubbles often break down in the open market.

1. Internet bubble in 2000: stocks will rise on the Internet.

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By 1999, 39% of venture capital investment had gone to Internet companies. Of the 457 IPOs, 295 were related to Internet companies, and 91 were in the first quarter of 2000 alone. The technology-dominated Nasdaq index rose from less than 1,000 to more than 5,000 between 1995 and 2000, and investors experienced what really scared them. The Nasdaq index fell from its peak of 5,048.62 on March 10, 2000 to its low of 1,139.90 on October 4, 2002, down 76.81%.

Obviously, even if the plan is good, there will probably only be one winner in every field, so most companies with the same business plan will fail. In fact, the characteristics of many fields themselves do not even lead to the emergence of dominance.

There are still many excellent IT companies that survive and prove their value, such as Amazon, Google, Neifei, PayPal, Yahoo, Sina and Netease. What is the price? In June 2000, Sina's share price was close to $60, and fell to $1 in October 2001. Netease shares fell from $4 in June 2000 to 13 cents in July 2001.

The bubble formed in the past five years is supported by loose money, aggressive capital, market overconfidence and pure speculation. From February 1994 to February 1995, after seven consecutive interest rate hikes, the target interest rate of the Federal Fund in the United States rose from 3.00% to 6.00%. From June 1999 to May 2000, after six consecutive interest rate hikes, the target interest rate of the Federal Fund rose from 4.75% to 175 BP to 6.50%.

This round of interest rate piercing the Internet bubble. Historically, during the interest rate hike period, investors did not have to be too afraid of the stock market falling. Instead, after the end of the interest rate hike cycle, U.S. stocks experienced a sharp decline.

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(Image source: Macrotrends)

2. The IPO Wave of Science and Technology Stocks in 2019: Losing Money and Earning Calls under the Loose Currency of Sharing Economy

According to the fourth quarter Money Tree report of PwC and CB Insights, the volume of venture capital transactions of American companies reached 99.5 billion US dollars in 2018, the highest level since 2000.

Of Airbnb, Instacart, Lyft, Palantir, Pinterest, Postmates, Slack and Uber, only Airbnb claims to have made profits for two consecutive years.

According to Dealogic data, during the 1999 Internet bubble, 547 companies raised a record $107 billion 900 million by listing. It is expected that the amount of technology share IPO will exceed this amount in 2019, but the number of companies is much smaller, and the operating life is generally longer than in 2000.

Third, does the shared economic model really make society better?

There are some problems in the so-called model of shared economy. If there are resources in the market that have not been fully utilized, in fact, platforms lead to more (slightly different) resource consumption. In addition to the downwind, the convenience and subsidies of Uber or Lyft ordinary taxi services have increased consumers'preferences for taxi services and the total traffic volume of the city.

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Take Airbrb for example. When you can rent your entire apartment, why use Airbrb to rent out a room alone? On the contrary, its business model has encouraged some speculative real estate transactions in a disguised way. Many residential and apartment buildings have been separated from the rental market and turned into hotels, further squeezing the already unbalanced real estate market.

Thousands of drivers from Uber and Lyft held a rally at Chicago's O'Hare International Airport on September 17 to protest against their low wages. Officials in Chicago have begun to consider learning about New York City, preparing to limit the number of taxi service vehicles. In the past three years, the number of taxi drivers in the city has tripled to nearly 66,000.

At the same time, it is proposed to raise the average wage level of taxi service drivers. Their current salary is only $11.53 an hour, below the minimum wage, after all kinds of expenses are excluded.

Shared economy essentially calls for the return of trust between people, but the centralization of power on large platforms leads to the erosion of trust. In fact, the shared economy takes advantage of the economic anxiety, isolation and frustration in contemporary life in a unique and ultimately profitable way. This idea is wrapped in environmentalism and liberalism.

Four, conclusion

But this year, IPO's new economic company is not the Swindlers Company that simply sold the Internet concept in the 2000 Internet bubble. In fact, the shared economy is just a business. It does not need to gloss over its intention to monopolize the market or label itself as a world-changing economy.

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