Public or Private, Tech Granted No Mercy

Tech investors are becoming increasingly masochistic.

While some Internet companies like Facebook seem to be emerging from the emergency room, many tech companies are hemorrhaging this year with few signs — and few believing — that the pain will let up anytime soon, a situation that is making it potentially harder for some of the public newbies that have fallen below their IPO prices to quickly heal.

Jack Dorsey’s two companies, Twitter and Square, are both trading below their IPO prices, as well as makers of the cool-kid toys, GoPro and Fitbit. Box and Brooklyn-based Etsy are also below their public offering prices. Not even the “Netflix and Chill” phenomenon could keep Tinder’s parent company, Match Group, from falling below its IPO price.

“The markets are echoing what’s already been happening in the [Silicon] Valley,” Joe Lonsdale, co-founder of Palantir and partner at venture capital firm Formation 8, told CNBC, referring to valuation pressures that start-ups now face in later rounds of funding.

Even LinkedIn, which went public nearly half a decade ago and in a single day dropped by more than 40% after its fourth quarter earnings results, is now being treated like a unicorn by investors, added Lonsdale, because a lot of its value “is going to be achieved over the next five to 10 years.”

And it’s not just the startups, newbies or mid-sized companies that are hurting.

On Friday, the Nasdaq slipped into a major bloodbath, dragging back down into the red the best recovered FANG stock this year: Facebook. All Google’s Alphabet, Netflix and Amazon could do was to brace for further pain.

The emergency room is getting packed with publicly traded tech companies, and start-ups are noticing. So perhaps it shouldn’t be expected that they’ll answer the calls anytime soon from investors like Fred Wilson and Mark Cuban to go public.

“Would I want to be the CEO of LinkedIn today as a public guy or a private guy?” said Lonsdale. “I’d much rather be private,”

“There’s a reason why they want to stay private in this economy.”