Another day, another stock market setback for once high-flying technology companies, which have lost roughly $1 trillion in the latest stock market slide.
Shares of the core group of consumer technology companies, including Facebook, Amazon, Apple, Alphabet and Netflix, are falling again — contributing to the big indexes like the Dow Jones Industrial Average and the S&P 500 sliding into negative territory for the year.
This collapse is thanks in part to rising interest rates that have investors looking for a more stable return profile than placing bets on high-growth technology companies. There’s also some concern that maybe growth won’t be so high for these technology giants as they enter their teenage and twenty-something years as public companies.
It’s also happening against the backdrop of an overall economic picture that looks less rosy for the United States. Single-family housing starts, which are considered a bellwether for the nation’s economic health, are still down from their highs, despite multi-family housing starts picking up.
None of this is particularly good news for startups or venture investors.
Indeed, it could impact planned IPOs for 2019, which has been billed as the big year when several later-stage companies were to make their public market debuts. Those public offerings were supposed to give investors liquidity, bolstering the argument for the billions of dollars which investors have poured into high-tech startups over the past decade.
If the IPO window closes, which looks likely should this slide continue, investors might be less inclined to open their wallets for startups looking to raise cash.
That could, in turn, present problems for companies with high burn rates. The declining value of tech stocks will also impact liquidity in other ways as companies become more conservative and will likely spend less on mergers or acquisitions that provided another avenue to exits for startup companies.
In all, this is a tenuous time for the tech industry, and it might mean the beginning of the end for this current boom cycle.