Are we seeing the big inflation of tech companies before they’re bottomed?
Some economists started their warnings that the situation with high inflation of the cost of hi-tech companies is reminiscent of the one that happened in the late 1990s – early 2000s, which is infamous as ‘dot com bubble’.
With so many tech companies at their peaks now (including Apple, PayPal, Adobe, Zoom, Cloudfare, and others), the Nasdaq Composite is as high as 10,900 points, mainly driven up there by the exuberant rise of tech companies’ values. Eerie the same happened back then in a ‘bubble’, when the IPOs of unprofitable tech startups flooded the market, making everyone believe their stocks is a new gold. And we all remember how that ended in April 2000, just 1 month after the peak in March.
Shortly after passing the peak, the market started to disbalance, doomed to fever, which is pretty much happening now – if you watch markets closely enough, you should have seen a sharp falling of tech stocks, which dragged Nasdaq down less than a day ago. As new money-losing IPOs continue to appear on market (like Virgin Galactic and DraftKings), the market veterans start to worry.
While investors could continue bidding up for some worst-performing companies believing the current policies shall keep them afloat, there are already cases of loud companies’ bankruptcies like Hertz.
Upcoming several weeks are to demonstrate to us the direction of this stock fall, if any, answering the questions if this is a ‘bubble’-like behavior of current ‘dot com’.