Tech Valuations Are Not a Bubble, They’re A Revolution

Tech Valuations Are Not a Bubble, They’re A Revolution

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Paul Sheehan's opinion piece is an excellent warning against the temptation to label the dramatic rise in the value of tech companies as merely a bubble.

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Snapchat is very, very popular. It is being used to post about one billion photos per day. During the past six months, the company has raised a reported $500 million from investors, giving it a nominal market value of between $10 billion and $20 billion. And the company has yet to prove it can turn a healthy profit.

Snapchat is one of about 70 e-commerce companies, mostly in the US and China, with a nominal market value of at least $1 billion. Most of them are largely unknown but a few are already legends.

Uber, the taxi booking company, has a nominal market value of $US41 billion, for a virtual taxi company that has no taxis and a lot of legal battles. Dropbox, the online photo delivery service, has a nominal value of $10 billion, and is also profit-challenged. Dwarfing all the start-ups is Xiaomi, a Chinese smartphone manufacturer, with a nominal market value of $US46 billion.

Moving into really serious valuations of disruptive new tech companies, Alibaba Group is worth $US260 billion. Another Chinese e-commerce company, TenCent Holdings, has a market value of $US148 billion. Baidu, the dominant Chinese search engine (Google is banned in China), is worth $US78 billion.

Read the full opinion here.

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