26th July 2017

High Flying Tech Stocks Priced for Perfection

This week Travis Kalanick, chief executive of car-hailing and -sharing app Uber resigned following a string of controversies connected to the company’s practises and his personal conduct.

Uber has raised $12bn in funding and is valued at $69bn despite having made substantial losses throughout its existence. It is one of a number of tech-based companies which have been hugely popular with private capital searching for the next big thing in a period of sluggish GDP growth. Kalanick’s departure is seen as clearing the decks for an IPO, where the institutional investors will try and persuade the rest of us to pay them more than the huge sum they have invested in a loss-making business. There are a number of companies out there selling things for less than the cost it takes to make them and spinning a great story to investors. It is possible that some of them will end up successful, but it is hard not to see investing in companies without a clear path to profitability as simply gambling.

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