Billionaire investor, Mark Cuban, suggestions that that the U.S. economy was suffering from an inflated tech bubble could in some way is true according to CNBC’s contributor Dan Nathan. The Dallas Mavericks owner is especially taking issue with how money is being pumped into small startup techs that are not making products and worse, cannot provide accurate valuations. Alibaba Group Holding Ltd (NYSE:BABA) going public last year had a ripple effect on the market with the likes of Google Inc (NASDAQ:GOOGL) going down and Facebook Inc (NASDAQ:FB) remaining flat
Cuban remarks come in the wake of private startups like Uber being valued at $41 billion, Pinterest at $11 billion and Snapchat at $19 billion. Should these companies decide to go public, Nathan expects them to suck some investors from Facebook Inc (NASDAQ:FB) and Google Inc (NASDAQ:GOOGL), which could result in them losing a substantial amount of value.
“If they were to come public, let’s say they were going to hold IPO’s in the second half of the year. Uber’s valuation is going to be much higher once the public starts to pile in. The worry I have is that, that money could suck a lot of life out of some existing needs,” said Mr. Nathan.
Google Inc (NASDAQ:GOOGL) was one of the biggest losers of Alibaba going public having seen its valuation slashed by 10% over the subsequent six months. The search giant has, however, bounce back as Alibaba hit record highs of $120 and soon started to plummet amidst overvaluation concerns and a string of negative news.
When Twitter went public, it sucked a number of investors from Facebook Inc (NASDAQ:FB) who believed that it was going to be the next big thing in the social networking space. Twitter Inc (NYSE:TWTR) consequently failed to live to the hype generating a much lesser valuation compared to its rival in the process.
Tech bubble suggestions could come out clear in the second half of the year when a number of tech IPO’s are expected to take place.
“[..] Q1 is one of the slowest IPO quarters for tech, which is one company going out. You are going to see very large IPO going out from Uber in the next 24 months and a lot of this companies. You will have to figure out is that going to fall off everyone equally is that going to suck some of the market cap of Microsoft Corporation (NASDAQ:MSFT) or an S&P or Legacy company whom these companies are taking share from,” said FirstMark Capital managing director Rick Heitzman.
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