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

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

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.

This story was originally published by Sydney Morning Herald

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.

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.