After the pandemic boom, Silicon Valley companies are going through a new, much less glorious era. After several years of sky-high valuations, Silicon Valley startups are in their worst crisis since the 2008 stock market crash according to NBC News.
Technology company stocks plummet
The beautiful growth fueled by the pandemic and the explosion of online services has pushed many Silicon Valley companies to initiate IPOs. One startup in particular perfectly represents the situation many others are facing: Platoon a startup that has designed a home exercise bike with a large screen that allows you to work out in one of the thousands of classes available with the Peloton All-Access subscription.
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A perfect service in times of containment, one must admit. Yet the company’s situation is emblematic of this grim reality. In just a few months, its shares have plummeted from from $163 at the end of 2020 to about $17 today. On May 5, the Wall Street Journal reported that the company’s executives were looking to sell a minority stake to an outside investor. During an economic downturn, Silicon Valley technology companies are particularly vulnerable because most of them do not turn a profit.
In france, it’s the opposite: French Tech startups have raised 5 billion dollars in the first quarter of 2022. The amounts raised in france jumped by 259% in value compared to the first quarter of 2021. The average ticket is now 21.3 million dollars. A very positive result, due in large part to some huge fundraising.
The zombie unicorns of Silicon Valley
Even companies that had made headlines over the past 18 months by raising millions of dollars to reach unicorn status ($1 billion valuation), have announced cascading layoffs. This is the case of Cameo, the stock trading app Robinhood, Thrasio, or Workrise. Some people even talk about “zombie unicorns” to refer to those startups that may need new investors to save them. Observers believe that it “are largely companies that never thought the venture capital train would slow down.”.
In the United States, the economic environment was less secure, and the ground on which the technological landscape rested began to resemble a “abyss” for many investors. Zach Coelius, an investor in several Silicon Valley companies, believes that the phenomenon of massive technology financing may be coming to an end. The situation is changing. According to him, the pressure began to mount at the beginning of the year, when interest rates started to rise and the stock markets began to fall. The situation worsened when the first quarter 2022 results were announced.
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