Udoes not fall by more than a third in the value of Snap after the social network announced to revise its forecasts downwards, – 23.6% at Pinterest in one day, also sliding at Meta, Twitter and Amazon… The day of May 24 looks like Black Tuesday as more than 100 billion dollars of valuation evaporated in the sector’s shares in less than 24 hours, according to Bloomberg. What’s going on on Planet Tech?
« This is the biggest fall, by far, since the crash of Internet stocks in 2000,” observes Benoist Grossmann, co-president of France Digitale, the largest association of investors and start-up creators in Europe, who explains that this situation had been latent since the beginning of the year, long before the war in Ukraine. “Some of us didn’t want to see it, but valuations reached ceilings in 2021. “Is it so bad when companies are making more turnover than when the bubble last burst? “Yes, the vast majority have a robust business, or even are growing strongly, but the amounts raised have been immeasurably higher and some spend a lot on a daily basis. »
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An opinion shared by Evan Spiegel, the creator of the Snap social network. “Like many companies, we continue to face rising inflation and interest rates, supply chain shortages and work interruptions, platform policy changes, the impact of the war in Ukraine and more,” the Franco-American entrepreneur wrote, before explaining in a document sent to the Securities and Exchange Commission, the US stock market watchdog: “Therefore, it is likely that our adjusted gross operating revenues and surpluses will be below the bottom of the forecast range that had been announced for the second quarter. »
This reversal finds an echo in the high volatility of cryptocurrencies, like the Luna currency which has literally collapsed, a situation that could last for several months. “Among investors, we have gone from the “fear of missing out”, that is, the fear of missing out on a good deal, to the “fear of looking stupid”, that of writing a check that would appear as overvalued in a few months”, continues Benoist Grossmann. The partner of the French investment fund Eurazeo has, in the past, allowed several French start-ups to join the Nasdaq. Moreover, large investment funds, such as the American Tiger and General Atlantic or the Japanese SoftBank, have singularly revised down their investment envelope dedicated to start-ups.
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Some even go so far as to renegotiate the “terms sheet” a posteriori, the conditions for granting financing, a very rare situation. As a result, the valuation of companies takes a hit. “It has been divided by 2 in the last quarter”, this is Jean de La Rochebrochard, managing partner at Kima Ventures, who has invested in more than 1,200 companies worldwide. Index unprofitable tech, which brings together innovative companies that are still unprofitable, has lost 75% of its value since its highest level, in 2021.
For Kima’s number one, this is a return to fundamentals, where start-ups will no longer be asked to be in overdrive, but to better manage the cash they have at their disposal. “Institutional funds reduce the “growth”, in other words table rounds to more than $ 50 million, to favor so-called seed investments, by a few million”, summarizes Julien Codorniou, partner at Felix Capital, based in London; a real turnaround therefore, but which could give rise to vocations. “Let’s not forget that it is in times of crisis that the best ideas are found”,he clarifies.