Could the New Tech Bubble Push the Economy over the Edge?
It’s no secret that I believe the economy is one of the greatest threats that we face. With the country sitting at over $17 trillion in debt, and another $120 trillion in unfunded liabilities, at some point the house of cards is going to come tumbling down.
As the newest tech stock, Twitter, makes its Wall Street debut, many financial analysts are starting to warn that this could be the beginning of a new technology bubble that could have devastating consequences on the economy.
Earlier this month, Twitter went public. The company, who has never made a profit, was valued at over $25 million dollars. Early investors and company insiders instantly became millionaires, as the stock jumped from $26 a share to over $45 before it even went live. Over 2,000 of Twitter’s employees became instant paper millionaires.
Again, this all comes from a company who has yet to make a profit.
Fueled by the perceived success of Twitter’s IPO, a wave of new Silicon Valley startups are expected to flood the stock market in the coming months – potentially setting up one of the largest stock market crashes we’ve seen in quite some time.
The next wave of tech IPOs includes even more internet start-ups that have yet to make a profit, including services such as AirBnB, Square, Spotify, Dropbox, Uber, Snapchat, Pinterest, Box, Scribd, Flipboard and King.com
Pinterest, one of the companies that’s expected to soon make its IPO, is currently being valued at 3.8 billion dollars. The company has never earned a single penny in profit.
But what just happened with Twitter may be the biggest indicator of what’s to come.
In spite of losing over $64.6 million in just the last quarter, the company’s stock almost doubled in the opening minutes of trading. If this trend continues, we will no doubt see another tech crash. The only question is, with an economy that’s already teetering on the edge of the abyss, will this be the straw that breaks the camels back?