Oculus Signals Ticking Tech Time Bomb

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March 26 (Bloomberg) -- Bloomberg's Cory Johnson, Julie Hyman and Leslie Picker discuss the big valuations behind the growing tech bubble. They speak with Trish Regan on Bloomberg Television's "Street Smart." (Source: Bloomberg)

What is going on behind the huge numbers?

This is a big number for them to pay for a company who does not have a product yet, let alone but ridiculous phrase about the company's been pre-revenue.

People seriously use this phrase.

This is a pre-product company.

They have a developer kit and have shown demonstrations.

They were out raising money.

We learned that there were other bidders out there for the company.

Facebook steps in and take them out.

The interesting thing is that is the notion of what the future might be in computing and might be some kind of virtual reality but this kind of virtual reality . facebook says this is the platform upon computing being done in the future.


back to the pre-revenue, pre-product idea.

Is there a danger money is so easy and so cheap to borrow that it is fueling return acquisition activity in a way that is not healthy?

You can connect the dot] said policy with this one.

One of the reasons facebook is up so much is the hope that everything will go well for facebook and because money is looking for returns it cannot find in other things.

The money continues to go up.

You see the money flowing into venture capital, tech stocks and story stocks.

It has the potential for future return.

That is where the money is going.

We see the stock price, which by the way did not used to happen.

Shareholders basically thinking this will be a better return on the capital.

Another tech company making news today, king digital going public at a path -- valuation of $7 billion.

I know you spoke to the ceo this morning.

And couple of things to point out.

King digital does have revenue and has profits as well.

Not talking about a company aced on nothing.

It is also an 11-year-old company.

In terms of being in a bubble, it the value is a discount to some of its peers.

The stock is down.

You would think if we were in a bubble environment, people would still be buying this thing.

10 times earnings?

Whether it is fair or not is not fair of me.

The market is making a judgment that it was higher than they wanted to buy.

This is a company that has basically one game that people play.

They are making fun -- money off of it, which is great.

In an environment such as gaming , is there a risk here that while it is popular today and making money today, it will not be popular tomorrow.

Of course.

We saw that was zynga.

Do is to say that cannot happen with candy cre¿che users defecting to something else?

Is this what is fueling the concern?


A lot of investors thought it would pop on day one and make a quick flip.

When that did not happen they said i am out and them done.

What does the ceos say?

I said what is going on here?

What is the next big hit?

Here is what he had to say.

My focus is not on the prize.

I think our strategy is a long-term strategy.

By focusing on the long term we create shareholder value.

Credit is in a strong position.

One really interesting point he made is yes, you have these various games that come and go in terms of popularity, however, the top games do tend to have staying power.

He is right.

If it catches on, they tend to stay in the top tier for a little while.

Candy cre¿che has been the most popular game.

Tech company after tech company that is demanding our attention these days.

It is not a valuation in terms of king digital.

We certainly are in attention.

If you watch the numbers facebook is putting forward and the craze over social media right now, does it feel anything like 2000? any similarities?

I was here during the gold rush in the 1840's. quite similar.

Same neighborhood even.

You look fantastic.

There are a lot of similarities.

I think it is more useful and think our work is more fun to do when we look at the things that are different.

One of the things that is different this time, one thing is these companies have a lot more age on them when they come to the public arctic.

A company going public tomorrow that i profiled 10 years ago that is going public with well over one billion in revenue.

The software company does human resource software and competes and is part of oracle now.

I think we see more maturity and some of the companies coming out.

One of the other differences is, a lot of the companies in the bubble relied on each other for revenues.

They were not selling technology to consumers, they were selling technology to businesses.

Except for those being fueled by other technology money and that has changed a little bit as well . some of the companies might have a future if there were not a market collapse or if the bubble did not continue for some of the valuations are really rough.

When you see what is coming down the pipeline, is that particular sector more crowded man consumer or health care or any other sector?

Certainly back.

We have seen a low over the past several years and now the pipeline is extremely -- strongly reported.

Talks just filed this week.

Another one losing a lot more money than it is making.

Another example of a company trying to capitalize off investor balance.

It makes you wonder when so many are coming out at a particular time.

Feels like we're talking about a life -- lots of ipos.

That is certainly one reason.

If you look at king digital as an example, they are not using the cash for the business.

Most of the money is going to pay off a tax partner, which was one of the early investors in it.

In that case, definitely have a cash out.

If i were out there right now i would be looking for the opportunity to take my money out in public markets or acquisition , that is the way to do it.

There are 100 73 ipos pending right now.

240 three percent increase.

Leslie will be buried the -- busy if those deals comes out trying to make heads or tails.

Clearly wall street once more speculative stuff.

Investors seem to be looking for that.

Looking for companies that do not have proven results.

They might and might not.

I think we might have expected to see this kind of thing, but as we remember, this does not end in a week.

Does not always end well.

We have seen the movie before and cannot help but ask the

This text has been automatically generated. It may not be 100% accurate.


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