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LinkedIn shares drop 40%, erasing $10B of company's value

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Re: LinkedIn shares drop 40%, erasing $10B of company's value

#501

Post by tryitnow »

pyrrhotech wrote: post #312

A lot of people hating on LNKD here, but this isn't really company-specific. This is a macro shift. LNKD being down by 40% by only guiding down 8% below estimates is a big warning of how the market is about to treat all bloated growth stocks. In 2013, if they reported the same results, the stock would have been flat or slightly down. It's a major shift in investor sentiment. Bubble bursts always start in the public m…

Gloomy, but likely correct. A lot of these current valuation numbers just don't make sense.

The implied growth rates in many tech stocks is unrealistically high.

The Bay Area's long-term employment prospects simply cannot support current home values or rental rates.

Once public and private equity valuations drop a lot of software development projects are going to get cut and with them the jobs of many software engineers. Engineers who keep their jobs probably won't experience pay cuts, but new hires are going to be expected to take much lower pay packages.

Why? Because the talent is going to be available at lower pay rates. So why pay more?

This is not necessarily a bad thing. There's a lot of irrationality in the tech business now and it's crowding out the rational participants. There needs to be a weeding out process. It is good that it has begun.

Remember to think long-term. Technology and the Bay Area are here to stay. Let's get the creative destruction process over with as quickly and painlessly as possible so that we can get on with making real innovations.

Re: LinkedIn shares drop 40%, erasing $10B of company's value

#502

Post by imsofuture »

Swizec wrote: post #375
ryanSrich wrote: post #332

Earlier quoted context omitted.

Tech employees making $200k+ are the only ones who can afford a $4k per month apartment in SF. If salaries drop then rent drops. I don't see this being a bad thing.

Eh, you exaggerate. Me and my girlfriend make about $160k together and we can afford[1] a $3.5k apartment in SF. If we made $200k+ each, or if even just one of us did, $4k wouldn't even be worth thinking about. [1] by "afford" I mean that there is money left at the end of the month.

You're crazy if you think spending 12-24% of your gross income isn't "even ... worth thinking about", even as hyperbole.

Re: LinkedIn shares drop 40%, erasing $10B of company's value

#503

Post by potatolicious »

pm90 wrote: post #417
cmurf wrote: post #360

Earlier quoted context omitted.

Probably not, because people don't ask. In 2008 when I was living in NYC, I asked and received 10-15% year over year decreases in rent (3 years). Long time NYers thought I was crazy to even ask. Incredulous I got it. And this was in Manhattan, doorman building, a few blocks from Lehman Bros. So yeah ask. And be prepared to move. If you aren't prepared to move, you're not ready to save.

Just curious, what do you mean, be prepared to move? Did you tell the landlord, "I will move if you don't give me a 10% decrease in rent"? I'm finding it hard to believe that in a market like NYC where the rents are sky high generally increasing, you could get such a discount. It also depends on the kind of property taxes prevalent in the states. e.g. in California, property taxes are set at the time of purchase, whi…

Tenant protection laws in NYC are very tenant-friendly, to a degree where someone who is sufficiently motivated and knows the system can effectively live in an apartment rent-free for up to a year at a time, if not longer.

Landlords are scared to death of deadbeat tenants like this, it costs a lot of legal fees to get rid of them, and they're freeloading while you're walking through the necessary legal processes.

Every time the apartment goes onto the market they're rolling the dice again - so the value of an existing pleasant tenant is substantial vs. the risk of a tenant of unknown quality.

Which isn't to say you can just get your rent slashed whenever you want, but it's part of the negotiation, and coupled with a recession it can be a powerful argument.

Re: LinkedIn shares drop 40%, erasing $10B of company's value

#504

Post by sounds »

tryitnow wrote: post #501
pyrrhotech wrote: post #312

A lot of people hating on LNKD here, but this isn't really company-specific. This is a macro shift. LNKD being down by 40% by only guiding down 8% below estimates is a big warning of how the market is about to treat all bloated growth stocks. In 2013, if they reported the same results, the stock would have been flat or slightly down. It's a major shift in investor sentiment. Bubble bursts always start in the public m…

Gloomy, but likely correct. A lot of these current valuation numbers just don't make sense. The implied growth rates in many tech stocks is unrealistically high. The Bay Area's long-term employment prospects simply cannot support current home values or rental rates. Once public and private equity valuations drop a lot of software development projects are going to get cut and with them the jobs of many software engine…

So what if you're one of those new hires (or hope to be one)?

I'd say keep polishing your resume. If you dropped out of school, look for a school with low tuition that isn't University of Phoenix but finish your degree. Stay on your toes: work your way through to graduation, get internships each September (as much as you can).

And though the retire-as-a-millionaire thing might have vanished, you'll land on your feet.

Re: LinkedIn shares drop 40%, erasing $10B of company's value

#505

Post by cplease »

singlow wrote: post #499
cplease wrote: post #493

Earlier quoted context omitted.

Ahem. I know a thing about tech, lawyers, and banking. You're talking about misconceptions about tech while feeding misconceptions about law and banking. In reality, most people in all three industries don't make $200K salaries. A big chunk (but by no means all) of Bay-area FANG engineers, New York bankers and Biglaw lawyers get this type of remuneration. Should be said too that most (not all) of these are pulling of…

He said that (most of) the 4k rents are paid by bankers and lawyers. He did not say that most bankers and lawyers pay 4k rent.

I doubt there are more lawyers than engineers paying $4K rent in SF. But whatevs.

Re: LinkedIn shares drop 40%, erasing $10B of company's value

#506

Post by neelborooah »

pyrrhotech wrote: post #312

A lot of people hating on LNKD here, but this isn't really company-specific. This is a macro shift. LNKD being down by 40% by only guiding down 8% below estimates is a big warning of how the market is about to treat all bloated growth stocks. In 2013, if they reported the same results, the stock would have been flat or slightly down. It's a major shift in investor sentiment. Bubble bursts always start in the public m…

As an engineer working at a "well-funded" startup, how can I prepare for the worst?

Re: LinkedIn shares drop 40%, erasing $10B of company's value

#507

Post by cplease »

pyrrhotech wrote: post #312

A lot of people hating on LNKD here, but this isn't really company-specific. This is a macro shift. LNKD being down by 40% by only guiding down 8% below estimates is a big warning of how the market is about to treat all bloated growth stocks. In 2013, if they reported the same results, the stock would have been flat or slightly down. It's a major shift in investor sentiment. Bubble bursts always start in the public m…

You really don't know what you're talking about. LNKD was not in S&P 500, "only" 8% off consensus earnings is not a small number, P/E multiples are nowhere what they were in 2000, there's been relatively little IPO activity. It's a different world. It may be a tough market but there's no basis for (most of) the numbers you are throwing around.

I could definitely see a decline in engineer salary, which could be significant in certain markets. But who knows.

Re: LinkedIn shares drop 40%, erasing $10B of company's value

#508

Post by EC1 »

njx9 wrote: post #367
EC1 wrote: post #364

Earlier quoted context omitted.

Misplaced moral outrage? You're a complete clown in real life if you let yourself get swindled to a point of paying 2k/mo for rent. Have some self respect.

Why are you so angry at someone who's just explaining the situation?

Trying to find solutions to the problem is fundamentally different than accepting the problem and finding a way to deal with it. It's the acceptance that kills me, because it validates the problem.

Re: LinkedIn shares drop 40%, erasing $10B of company's value

#509

Post by caseyf7 »

pjdemers wrote: post #464
sinzone wrote: post #439

Earlier quoted context omitted.

> 30% decline in bay area real estate values. that won't happen. During the 2008 big burst everywhere in USA was felling apart but in SF real-estate was just down 5%-10%. SF can't expand easily since it's water 3/4 all around. Demand still high and supply very low. That won't change dramatically, with or without a collapse in the public market.

During the 2001-2002 bust, bay area rents fell 50% in marginal neighborhoods. In desirable neighborhoods, rents fell maybe 10%. Prices to buy came down, but not nearly as much. In marginal areas 20%, in desirable neighborhoods, maybe 1%. Small houses and fixer-uppers in the 10/10/10 school districts (ie, Palo Alto) kept going up. One reason is that construction prices fell 30%, so there was allot of tears downs and r…

Very true. In 2001, landlords of rent-controlled apartments wouldn't even pause the rent increases in the best neighborhoods.

Re: LinkedIn shares drop 40%, erasing $10B of company's value

#510

Post by [deleted] »

cplease wrote: post #507
pyrrhotech wrote: post #312

A lot of people hating on LNKD here, but this isn't really company-specific. This is a macro shift. LNKD being down by 40% by only guiding down 8% below estimates is a big warning of how the market is about to treat all bloated growth stocks. In 2013, if they reported the same results, the stock would have been flat or slightly down. It's a major shift in investor sentiment. Bubble bursts always start in the public m…

You really don't know what you're talking about. LNKD was not in S&P 500, "only" 8% off consensus earnings is not a small number, P/E multiples are nowhere what they were in 2000, there's been relatively little IPO activity. It's a different world. It may be a tough market but there's no basis for (most of) the numbers you are throwing around. I could definitely see a decline in engineer salary, which could be signif…

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