DoorDash, a food delivery app with several deep-pocketed competitors, $1.9bn in revenue in the first nine months of 2020 and $149m in losses, rose 85pc on its first day of trading to hit a valuation of over $70bn. Airbnb, which had revenues of $2.5bn and losses of $697m in the same period, was up 112pc. The latter’s numbers are admittedly down due to the pandemic, but even so, conventional wisdom is out the window here.
A third tech company went public last week and earned less attention than DoorDash or Airbnb. But, for bubble watchers, was even more astounding. C3.ai, a software company that lets businesses create artificial intelligence applications, and boasts a handful of big industrial clients, rose by almost 200pc in its first three days. It is valued at around $12bn, around 75 times last year’s revenue.
For those looking for evidence to support claims of a bubble, there is no shortage of it. The Shiller PE ratio, a cyclically-adjusted measure of share prices against their earnings, is above the level before the 1929 crash, only now exceeded by the dotcom bubble. Tesla shares are up 600pc this year.
The flow of cash into the stock market is a result of exceptional monetary stimulus, meaning it has become divorced from the “real” economy that is still being pummelled by Covid.
