Jan 24, 2018

Investing like it’s 1999: when will the new tech bubble burst?

Like the dot-com bust of the late nineties, giddy investors are inflating Australian tech company valuations beyond what they can realistically live up to, but you won't see them complaining.

Adam Schwab — Business director and commentator

Adam Schwab

Business director and commentator

Like the feeling you get when you watch a movie you haven’t seen in decades, it's easy to look back at the 1999 tech bubble through an indistinct haze. Bubbles -- like what we're seeing develop on the ASX -- are largely driven by FOMO, where rationality is cast aside on the basis that your brother-in-law is making a bunch of money on shares and bitcoin.

What seems to be playing out on the ASX is a renaissance of garbage tech companies getting obscenely high valuations. This is very different to the US, where the largest companies are now tech businesses, like Facebook, Apple, Amazon, Netflix, and Google. The key difference is the FAANGS largely (Amazon aside) churn out billions of dollars of profits. In Australia, the scenario is very different. The briefest of reviews of these business’ ASX filings, and a little common sense, would quickly reveal the extent of the impending calamity -- but as former Citigroup CEO, Chuck Prince once noted, “as long as the music is playing, you’ve got to get up and dance.”

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2 thoughts on “Investing like it’s 1999: when will the new tech bubble burst?

  1. Peter Hannigan

    I think the analogy is a little unfair to roulette! Of all types of gambling it has the best odds – if played right. You still lose of course.

  2. Squeef

    This is terrible journalism. Aside from all of the spelling errors and ridiculously florid prose, absurdly emotive, un-fact checked pearlers like this one (excuse the paraphrasing) ‘a teenager in Tel Aviv (um…why Tel Aviv?) could have designed a better tech platform in their bedroom over the summer holidays’ expose this article to be a bias driven hit job quite happy to set any sad remnants of journalistic integrity aside lest they impede on the pre-ordained narrative.

    What’s the author’s first hand experience of the platform that warrants such a spray pray tell?

    No doubt there are some serious issues of governance at hand re Getswift. This article however is so poorly researched, and so obviously biased, that the only new element it adds to the discourse surrounding Getswift is the curious question of how it could possible have come to affect the author so personally as to have left them in this emotional lather. Bad investment choice?

    Let’s not also go into the fact that it’s entirely healthy for companies from any sector to be valued with forward looking projections, not just based on reported revenues.

    For the sake of Crikey’s health and reputation I hope this isn’t a sign of things to come re financial reportage.


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