It’s a rough day in the public markets for high-flying tech companies. The recently public Weibo and stalwarts Netflix, Amazon, Twitter and Facebook are posting large losses. The combined declines have helped push the NASDAQ down nearly a percent while the Dow Jones Industrial Average is up a fraction.
Weibo is leading the declines, slipping nearly 10 percent. The company popped nearly 20 percent on its IPO day after pricing its shares on the lower end of expectations, and restricting the number of shares for sale. However, trading today at $17.33, the company is essentially a quarter coin from its IPO price.
Less dramatic falls abound: Twitter is off 3.77 percent, Facebook 4 percent, Amazon 4.65 percent, and Netflix 5.1 percent.
The fall in value of so-called “momentum” technology stocks lowers the implied valuation at which other, still-private technology companies can go public. The less that Weibo is worth, the less, implicitly, valuable analougous firms are that haven’t gone public — their private valuation may be static due to a lack of liquidity, and a recent but past equity sale, but that doesn’t shift the decline in their potential market value.
My favorite venture capitalist likes to say that the venture capital market is just the NASDAQ on steroids, and he has a point. And at the moment the NASDAQ is taking a pause.
Briefly, what’s smacking Weibo? It appears to be a censorship flap in the Chinese market:
Sina, the company that owns China’s über-popular Twitter-like service Weibo, has had two key licences withdrawn by Beijing in retaliation for allegedly allowing the publication of articles and videos containing pornographic content.
A missive from the National Office Against Pornographic and Illegal Publications seen by Xinhua claimed that 20 articles and four videos posted to Sina.com had broken anti-porn laws and as a result the government had revoked the firm’s internet publishing and audio and video publishing licences.
The firm has been hit with a “large number of fines”, some staff have been detained and some local reports claim Sina has already shuttered its online book site for the time being.
IMAGE BY FLICKR USER Ed Schipul UNDER CC BY-SA 2.0 LICENSE (IMAGE HAS BEEN CROPPED)