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Comment by amrrs | Hacker News Reader

Lyft, Uber, Zoom, Beyond Meat and now, Slack

Is there any benefit of Public at this point of time? or Just a trend to grab as much as Wallet share from the average investor?

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The market is going to crash and everyone wants to cash out before it does.

But could also be the thing that will make the market crash nobody knows

The S&P 500 by itself is valued at almost $24T (https://ycharts.com/indicators/sandp_500_market_cap).

A couple large companies going public and raising several billion dollars will not make the market crash. All of them listing at once is a symptom of where we are in the economic cycle, and where these companies are in their individual growth curves.

I can see that happening.

Loss making unicorns go public -> investor pressure builds to reach profitability -> none of them can deliver on promises in the short term -> public does not want to own these stocks anymore -> causes a frantic selling spree -> market crashes.

Why would the market crash, and not just these few bad comapanies? What's systemic about the overhyped IRC clone or just another taxi service getting their fair value judged by public markets, that would cause a market crash?

Maybe it finally pushes the student loan crisis over the edge when an influx of unemployed tech workers are added to the tens of thousands defaulting on their loans?

Outside of silicon valley there's an extraordinary amount of unfilled tech positions. If they are unemployed it's likely their own fault.

> If they are unemployed it's likely their own fault.

Well hold on, I was just idly speculating, but I don't like this kind of thinking. There's a hundred and one reasons people can't leave a city, or the obstacle to leaving is too great.

Off the top of my head, not wanting to uproot kids into a new school system, partner's job, disability that makes it extraordinarily difficult to move (away from whatever ADA stuff you've got set up at your apartment and commute flow you've got set up), need to stay near sick family, need to stay regional to a very specific doctor or healthcare facility, and that's just needs. A strong desire to stay in a local area due to history or just preference should be valid as well.

I see this reasoning used to attack non-tech workers all the time and it bothers me.

I doubt there will be a global stock market crash but a there can definitely be a burst of the second dot com bubble. It would be enough for one of the overvalued companies to go bankrupt to take them all down, e.g. Tesla (they certainly have liquidity problems).

The portfolio effect:

A lot of funds pile into the techs. They lose money. Their customers pull their money. They have to sell not just the techs, but the rest of their portfolios too.

Well, Zoom is already profitable and Slack could easily go profitable.

But yes, the tale is different for AirBnB, Lyft, and Uber.

Airbnb is profitable. It has been since second half of 2016. Or at least close enough to profitable depending on the metrics you want to account for.

https://www.marketwatch.com/story/airbnb-made-its-first-prof...

https://www.bloomberg.com/news/articles/2019-01-15/airbnb-sa...

Ah thanks! I always did get the impression it was a more viable business than Lyft or Uber, but wasn't aware it was becoming profitable.

Haha yep. Cheers!

What specifically will make the market crash?

If nothing else, the cycle of the market. Might not be this year, might not be next year, might not be the year after, but it's inevitable and we're coming due. Could happen at any time for any reason, but it will happen. If you're thinking of going public, you want to get in before that happens.

The GOP's tax heist that has led to dumping rocket fuel on an already insanely hot market, leading to stock buybacks that give the illusion of growth and mask warning signs, coupled with removing the safety net of having the ability to reduce taxes when things do start declining.

We're in for a rough one, and it is VERY intentional this time.

I've been seeing a lot of calls about this incoming downturn (especially HN), does anyone have any articles/analysis they can point me to? Would love to read up on the state of it.

The recent yield curve inversion got a lot of peoples' attention as that has preceded recessions since the 1960s or so, but I can't point to a better article than mainstream news.

There is no "state of the art" of predicting the future, sadly.

No. The bull run could sustain for another 10 years or end tomorrow. I bet people predicting the downturn are also still heavily invested in stocks.

That's the nature of the market. However, it's still a very valuable to say 'market will be lower than today, by 30%, somewhere between today and 10 years'. The periods where this phrase were true throughout history are rather very rare - and I do belive it's quite true now.

> I bet people predicting the downturn are also still heavily invested in stocks.

As they should be, unless they plan to retire in the near future. Attempting to time the market is generally folly.

We've been in a bull run for a long time. The market will eventually have a downturn. No one knows when that will be, how big it will be, or how long it will run for.

HN comments can be excellent on certain topics, finance is certainly not one of them.

The short of it, is that in some cases stocks have gone up 2 to 3 times their value in 5 years, yet revenues have been flat. Also, companies have been doing stock buy backs in some cases using bond debt to do it.

Another kind of interesting thing is the amount of money going into index funds. These index funds buy stocks based on their position in the market. The influx of capital allows companies to stay in the S&P 500 that before may have been removed. This optimizes for whether or not you're in the S&P 500 and not actually company performance. Decoupling your survival from reality is not a healthy ecosystem.

https://www.thestreet.com/story/10115781/1/investors-holding...

Charles Hugh Smith is pretty perceptive (oftwominds blog) but no one knows what triggers drops in confidence and when these major events occur.

Sure, here's a 2009 HN thread all about the impending market crash:

https://news.ycombinator.com/item?id=712198

And one from 2011:

https://news.ycombinator.com/item?id=2868728

And here's one from 2012:

https://news.ycombinator.com/item?id=3947923

Here's one from 2014:

https://news.ycombinator.com/item?id=8338411

And here's one from 2016:

https://news.ycombinator.com/item?id=12218583

Nicely done.

The truth is that no one really knows when the crash will come. But it will come eventually.

The boy who cried wolf did end up being right about the wolf, just not the timing. :(

"The Single Greatest Predictor of Future Stock Market Returns": https://news.ycombinator.com/item?id=14948078

And here's the live (well, lagging a few months, but this is a very slow signal anyhow) version: https://news.ycombinator.com/item?id=14950203

I've enjoyed that article since it was first posted. Its predictions have held up well.

As you said, it's a very slow signal. The model predicts what will happen over 10 years. It doesn't say whether there will be steady X% YOY growth, or a massive plunge and then a compensating rebound.

Slack is doing a direct listing and aren't raising money via their IPO. This could be good for the average investor as the prices woun't be pumped up but the risk is that there was no price discovery.

Give investors liquidity before the inevitable economic downturn, without needing to sell the company.

Seems like it wouldn't be a great idea to IPO at the same time as everyone else, since like there isn't unlimited money out there, but who knows.

I wouldn't really club Zoom in with the rest of the tech IPO's, they've shown a profit and seem to be able to stay that way.

It's interesting that it's turned out that way - of those options you'd guess that a video chat platform would have a higher overhead...

Reminds me of the IPO rush in 2000/2001.

Slack is a little better than VA Linux...you have to admit!

Has there ever been a non monetary benefit to going public?

It can give you credibility to your customers. They can see your financial position which, assuming the company is performing well, can give them peace of mind that you're not a startup that will disappear tomorrow. It helps with recruiting, as you're more well known and the equity that folks get is more liquid.

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