Tags: Bilton | tech | bubble | fears

New York Times' Bilton: Tech Bubble Looks Real

By    |   Monday, 25 Nov 2013 07:45 PM

Many financial commentators warn that a bubble is brewing in the technology sector, and New York Times columnist Nick Bilton says they have a point.

"Is this time different [than the 1990s tech bubble]?" Bilton asks. "Out in Silicon Valley, many insist it is. But for the average investor, there are reasons for caution."

A good example is Facebook's reported $3 billion offer for Snapchat, a messaging service that has no revenue. Eight months ago, Snapchat was valued at $70 million.

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"Once again, new 'metrics' are being applied to justify stratospheric valuations," Bilton writes. "Twitter is losing money. A price-to-earnings ratio? There is no E in the P/E. But its stock is trading at 20-odd times the company’s annual sales. Good enough."

The coup de grace may be that Kozmo.com, the famous dot-com-era flameout, may be revived. Kozmo.com was a home delivery service. Its website now reads, "Remember us? We’re relaunching soon."

Bilton's conclusion: "It is difficult to know when any bubble is going to pop until it does. And in Silicon Valley, with its inherent optimism in brighter tomorrows, the view tends to be that the way is always up."

Plenty of others share Bilton's sentiments.

"While there’s certainly more substance to many of today’s hot firms, like Twitter or Facebook, than there was to, say, Pets.com or many other iconic firms of the late 1990s, I do feel the same frothy enthusiasm in the market, as investors put enormous valuations on firms that still don’t make any money," writes Time's Rona Foroohar.

"I also sense a lot of bubble-like hubris from techies themselves."

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Many financial commentators warn that a bubble is brewing in the technology sector, and New York Times columnist Nick Bilton says they have a point.
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Monday, 25 Nov 2013 07:45 PM
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