/biz/ - Business & Finance

[Anonymous No.936224]

so is dotcom bubble 2 popping? Some people think so.

http://www.latimes.com/business/hiltzik/la-fi-mh-the-silicon-valley-investment-bubble-starts-to-deflate-20151019-column.html

http://www.investing.com/analysis/the-death-of-hopium-268037

what do you think /biz/?

[Anonymous No.936279]

1. What is a bubble?
2. In what ways does this match that definition?

[Anonymous No.936284]

>>936279

1. A "bubble" is when investors, often under some sort of delusion, overinvest in unprofitable ventures. It "pops" when said investors can no longer continue to afford to invest in it. "Bubbles" are often driven by over-speculation, aka people speculating or expecting a return from a venture that is currently, on paper, not profitable

2. Many Silicon Valley area businesses are not profitable, yet are obtaining billions in venture capitalist funding. This isn't inherently bad, all businesses operate in the red once in a while (especially when they are just starting up) but eventually they need to make profit. So far, this has not occurred and some Venture Capitalists (investors) are getting concerned that many businesses in the area, which are currently the subject of a lot of hype, aren't actually viable. For example even though Uber reported a net gain in revenues they are still not profitable and in fact their loss margin has grown even though revenues have grown too.

A similar sequence of events played out in the late 1990s, called the "dotcom bubble".

[Anonymous No.936403]

>>936224

[Anonymous No.936405]

>>936403
If I had to guess why this is happening, I would say talent being drained from people making cool things instead going into figuring out how to serve ads for shit things to as many people as possible, because that's basically much easier to do.