Looking around at the tech companies in the world, most have what is negligible or no revenue. However when it comes to value of companies especially the big tech companies, the estimated value comes at an illogical value of even more than $ 1 billion, with no way of give good reason for such estimated values. This on the other hand clearly shows that there is a boom in the tech world and to a larger extend signs of a tech bubble burst can be seen.
How tech bubble comes to be?
Understanding of events in the tech world and how there seems to be a bubble burst comes with taking a keen interest in tech companies. Investigating further one can literally see a burst of inflation rates than what they were previously predicted to reach. One way this comes about is that the interest rates given to the tech companies are always valued at 0%. With the borrowers, being the tech company paying interest loans at no charge money gotten is cheap. Still when it comes to savings, they go ahead saving the money in low risk to risk free bank accounts giving them the upper hand and thus gain money. However in the tech world the tech burst comes to be as the investment is done in extremely risky assets that have massive returns and thus the valuation comes to be. This way money for the investors comes up in the end leaving no money for the company. The result that occurs is the stocks and other investment assets in relation to the company go up.
Reality on the ground
In recent times comparisons in software trading and number of deals being done show that there is a massive decline in the amount of money placed by investors in companies. This is for the simple reason that the numbers of deals are significantly fewer than what was previously traded. In the long run the tech companies end up being overvalued with no real money in the company, showing that the tech bubble burst is about to happen. Strong evidence showing that the tech bubble burst is happening soon is that mass money coming in can be traced to IPOs that are losing money. With tech a company using the trick to go public shows the bubble clearly. With the profits reported always being shown in negative the need to raise the revenue seems to still be working, but on a larger scale. The tech companies then overvalue the stock overpricing it in the process making it go even higher creating bubbles.
When it comes to usage of the money, a simple trace ends up leading to the salaries of top management and engineers in such tech worlds. With surveys showing that engineers get an absurd amount of almost $ 100,000 each the money is spend as fast s it comes in. This usually leaves the tech companies in disarray, as with successful new project currently in the market a negative profit is usually shown. This in the need leads to layoffs when the stock valuations are done.Will there be a tech bubble burst soon? The answer to this lies with the tech company’s overvaluation of their stock and lack of investment in the company. However looking at the evidence, it seems to be a ticking time boom.