in life, history doesn’t repeat itself. But it does rhyme. The share price of Chewy, an online pet-food retailer which has just listed in New York, shot up by more than 50% on June 14th, its first day of trading. To seasoned investors it brought back memories of Pets.com, Chewy’s ill-fated predecessor, which collapsed nine months after it debuted on the Nasdaq exchange in February 2000.
Today the tech listings are fewer, startups’ losses bigger and investors a bit more cautious than 20 years ago. True, technology firms have raised a total of $19bn through initial public offerings this year, the most since 2000 for the same period, and gained roughly 30% in value on average, according to Dealogic, a data-provider. The tech-heavy Nasdaq has risen by just 19%. But several big initial public offerings, notably of ride-hailing giants, have flopped.
Corporate software did not feature prominently in the original dotcom mania. Before the advent of cloud computing, selling and installing such programs was tedious and labour-intensive. Big firms like Oracle anddominated the market with bundled products which had to be customised to meet a customer’s needs. Today cloud-based “software-as-a-service” lets business-to-business startups focus on doing one thing well.
Admittedly, Slack and the others have so far had an easy ride. They have, in effect, outsourced marketing and sales to tech-obsessed early adopters who proselytise in their workplace until management too becomes a convert and signs a deal. That explains why Slack is hugely popular among startups but not yet among bigger firms. Attracting them requires costly investment in marketing and a proper sales force.
To be sure, business-facing startups are less prone than an Uber to burn cash in a single-minded quest for scale. But if investors see hints of Uberification in Slack’s earnings reports, its listing too could disappoint. That in turn may give pause to other startups preparing to go public, including WeWork, an office-rental company seeking a $47bn valuation despite recently posting a quarterly loss of $264m. Today’s dotcom boom may fizzle before it bursts.
They no longer use metrics that ignore cashflow, like in 2000.
I mean, it's all just a bluff. … I'm a long time watcher of markets. You think all that information is wrong?
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