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News Article

Tech Bubble is Popping, Again

By MBN Staff | Fri, 04/03/2020 - 14:32

Twenty years ago the dot com bubble burst in Silicon Valley and for years, investors were waiting for the drop that would spill the glass again. However, this time the cause was not overvalued companies or passing digital platforms, but COVID-19.

The first testament is that layoffs in all industries are accelerating. However, there are tech companies that are being affected more than others. A clear example is SoftBank Group, which backed out of a US$3 billion deal to buy WeWork stock, which means that Neumann is not even a billionaire anymore, according to an analysis by Bloomberg. SoftBank cited regulatory concerns and government investigations, not the collapsing market, as the reason for the move.

Also, the hype around scooter companies had already been fading. Bird recently confirmed the firing of 30 percent of its employees, the reason being the instability caused by COVID-19. According to reports from Tech Crunch, uncertainty regarding the disease has led this company to cut its workforce. According to a CNBC report based on multiple media records, startups have cut nearly 4,000 jobs this month.

But that is not all. According to Bloomberg, the seeds of the next boom may already be planted. Zoom Video Communications, the video conferencing service, revealed this week that it had gone from 10 million daily active users to 200 million thanks to the crisis.

In the US, House Speaker Nancy Pelosi and Ro Khanna asked the heads of the Treasury Department and Small Business Administration this week to ensure startups can receive relief funds from the federal government designated for small businesses.

The data used in this article was sourced from:  
Bloomberg, CNBC
Photo by:   Unsplash
MBN Staff MBN Staff MBN staff