Displaying items by tag: silicon valley

(San Francisco)

Facebook announced this week that it would pay a $5 bn fine to settle a Free Trade Commission investigation into privacy violations. The exact same day, Facebook announced that the FTC had launched another probe, this one perhaps more worrying. The new probe is a formal antitrust investigation into Facebook. The company disclosed the investigation alongside its quarterly results yesterday.

FINSUM: So Facebook and big tech not only have the DOJ on them now, but now the FTC too. End of the golden age of the FAANGs?

(New York)

Markets sold off in a big way when new of the government’s antitrust push against the FANGS came out. The stocks lost $130 bn of value. However, the reaction may be overblown, with each stock needing to be assessed on its own merits, as the antitrust picture would look different for each of them. A managing partner at Andreesen Horowitz, one of Silicon Valley’s top venture capital firms, makes an interesting point, saying “The big challenge with these antitrust things is, it’s not obvious what the consumer harm is today”.

FINSUM: We think that point is very salient, as given the fact that it is hard to assert how consumers are being harmed, we expect the ultimate output of these investigations may be relatively light touch (such as a GDPR-like regulation).

(Silicon Valley)

The next couple of years is supposed to be the new golden age of tech IPOs. Huge Silicon Valley unicorns like Uber and Lyft ae supposed to IPO, as are a slew of less well-known, but still big, names. All the activity is supposed to kick off very soon as Lyft has just priced its IPO. The company is seeking a valuation of about $23 bn based on an offering of just over $2 bn of shares. Uber, its rival, is planning to IPO soon as well, and looking for a valuation north of $100 bn.

FINSUM: Let’s put the Lyft valuation in perspective—the company has $2.16 bn of annual revenue, but lost almost a $1 bn in the last year. Quite eye-opening.

(San Francisco)

Have you been upset about missing out on some of the big tech companies in the last decade? Well, your chance to buy in is coming; or at least that is what Wall Street’s bankers want you to think. A string of big tech IPOs appear to be in the works. From Lyft, to Uber, and featuring Pinterest, Airbnb, Slack, and WeWork, a big Silicon Valley roadshow is coming to the market this year and next. The major question is how the companies will fair once public. The tech market has been hurt recently, and public market valuations have been wounded.

FINSUM: These companies have massive private market valuations, and it seems like they will underperform a bit when they do finally debut (at least in the short-term). That said, a couple of them will likely turn into incredible long-term holds.

(San Francisco)

Facebook had an absolutely historic plunge last week, losing $120 bn of market cap in an afternoon. It has not fared so well since either, as many of its tech brethren have also seen big losses (like Twitter and Netflix). There are also mounting fears about a fundamentally darker future given the scandals and controversies it has become involved in. All that said, the stock still looks like a buying opportunity, at least according to some Wall Street analysts. The key to playing the company is not to wait for signs of margins and revenue stability. “Many investors prefer to wait for the appearance of margin stability … We understand this, but stocks tend to bottom and recover well ahead of margins and trade at much higher multiples when they do”, says a stock analyst.

FINSUM: Investors really need to contextualize this loss. Revenue growth rates came in 1% below expectations, leading to a massive loss. We think there is a good buying opportunity here.