Stampede of the unicorns: will a new breed of tech giants burst the bubble? | Technology | The Guardian

Stampede of the unicorns: will a new breed of tech giants burst the bubble? | Technology | The Guardian

This time, too, there are signs that things may be too good to be true for some companies. These companies “are just not making any money”, said Smith. And that is a problem.

Lyft, like nearly all the other big companies preparing to come to market, is burning through cash. Last year it lost $911m as it bumped up its marketing budget to compete with Uber and cut its prices, to the anger of drivers. Those losses set a record for the amount of money a company has lost in the 12 months before going public. But it’s a record that looks sure to be broken – and soon.

Uber lost $1.8bn last year. WeWork, the office rental company and would-be lifestyle brand, lost $1.9bn in 2018.

Recent history suggests Smith is right. Stock market investors may get excited by the hot new IPO but they have little patience for companies that continue to bleed cash like a drunk in a casino. Two years ago, investors rushed to snap up Snap Inc, parent company of the Snapchat app, for $17 a share. The company has lost money since 2011 and lost $1.3bn last year.

Now investors are sharing those losses. Snap Inc shares are worth about $11 today…