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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

#641

Post by mathattack »

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…

I'm expecting a 30-40% decline in S&P 500, 30% decline in bay area real estate values, 30% of bay area "well-funded" startups going bust, and 25% reduction in market rate pay for software engineers over the next 2 years. Hopefully that will turn out to be a gloomy forecast, but it's best to prepare for the worst.

I don't dispute your gloom, but I challenge your %s.

- "Well Funded Startups" have a >1 correlation to the overall stock market. (Market moves 10%, they move higher than 10%) So if we see a several year 30-40% decline in the S&P, this will cause more than 30% of the "well-funded" startups to go bust. Anyone who can't switch to cash flow positive would have a high likelihood of going under.

- Real Estate values tend to move slower than stock market prices. (People can ride the market out, and just not sell the house) It would take a very sustained market hit to cut real estate by 30%. Also, much of the money fleeing China is coming to the Bay Area. (This isn't to say that it couldn't happen, but you'd need to see 5+ years of a depressed stock market) The reason it tanked so much in 2008 was that the bubble was in the financing mechanism.

- I think if you count equity, the market rate pay for engineers would get hit worse. Options that on-paper are worth 500K can quickly go to zero in a down round. Other variable comp will get hit too. Not sure about base salaries. Even in an enormous down market, most of the world will still be short engineers. In 2001 the folks who got crushed were the Marketing majors posing as Web Engineers.

You didn't mention my big hope though... A 30-50% reduction in Bay Area commute times! :-)

One bright side to a crash - it is better to start a company where good talent is plentiful and cash is scarce, than the other way around.

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

#642

Post by kccqzy »

toomuchtodo wrote: post #241
seanwilson wrote: post #238

Earlier quoted context omitted.

For what it's worth I have a Facebook account and have all the email notification settings off and can't remember seeing an email from Facebook in over a year.

I noticed that when I stopped checking my Facebook account, Facebook started sending me FOMO messages ("Hey! You have messages! People are saying things! Please come look!")

Facebook's email messages used to be pretty useful; they used to contain the actual content of posts. That means if you also turn off remote images, you can actually read Facebook posts without Facebook having realized that you've read it. I've always done this for privacy, until they stopped putting the actual post in their emails.

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

#643

Post by brianwawok »

astazangasta wrote: post #601
steven2012 wrote: post #600

Earlier quoted context omitted.

You say no one can afford it, but all the apartments are rented out.

Sure, but that class of people can't do all the things required to run the city (food service, child care, etc). Those people have been priced out and are moving elsewhere. The city suffers; it becomes difficult to sustain the current pattern.

I mean other cities are like this too. Chicago is a very cheap big city. But how many server workers live in Gold Coast or River North? The difference is I guess cheap housing is closer compared to SF?

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

#644

Post by toomuchtodo »

ownagefool wrote: post #620
RhodesianHunter wrote: post #615

Earlier quoted context omitted.

Most management can't tell the difference between the two.

True, but you're assuming they won't be part of the same cull.

Culls occur from the bottom up. Engineers, then management.

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

#645

Post by toomuchtodo »

rsync wrote: post #613
jrowley wrote: post #445

Earlier quoted context omitted.

Exactly. Property values might not continue to grow at such a high rate but they aren't going to decrease by 30%. That's ludicrous.

It just happened ! Not more than 7-8 years ago! It happened in many, many markets across the US and the world. We just saw it happen!

How quickly people forget :)

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

#646

Post by toomuchtodo »

Swizec wrote: post #423
ryanSrich wrote: post #410

Earlier quoted context omitted.

You're spending 50% of your monthly post tax income on rent. That's not what I would call affordable.

Closer to 45% really. But it's still cheaper than paying less rent and owning a car. Not having any dependents is also pretty handy in keeping money piling around instead of spending it. We also save a lot (and are healthier and save time) by cooking at home instead of going out to eat. So, really, we get to both live in downtown SF, and travel pretty much whenever we feel like it.

What's your reason for living in SF and still traveling frequently? Access to work in SF?

I ask because I'm a remote worker for an SF startup, home base in a low cost of living area, but I travel frequently as well (but the home was purchased somewhere where the house is paid in full already and the monthly upkeep is ~$500/month).

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

#647

Post by cmurf »

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…

I didn't literally say I will move. I was more coy and diplomatic about it. I just said the market is different, rents are coming down in the neighborhood, it's a great location and apartment and I'd really like to stay here but economic good sense tells me it's reasonable to request lower rent right now, and I think $x is reasonable.

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

#648

Post by ownagefool »

doktrin wrote: post #635
ownagefool wrote: post #589

Earlier quoted context omitted.

Wages probably will fall but it's probably also more complex than that. Your extremely talented engineers who build things at scale and understand the fundementals, who are basically a safe per of hands, are still going to be in deep demand. Profitiable companies that work at scale are still going to have real problems and are unlikely to turn around and tell their engineers that they're going to be getting significa…

This strikes me as a bit of a fantasy. Very few people can recognize, and even fewer value, a "safe pair of hands". Let's not also forget this industry's rampant ageism, which even in good times sidelines experience in favor of hipness. I have no idea why you think this will magically change just because times are tough.

I'm not sure the industry suffers from ageism in the way most people here think it does. The start-up community hiring cocky 24 year old team leads who refuse to heed advice from their seniors definitely aren't going to be hiring the older guy, sure.

However, remove the funding and force these companies to actually compete on merit and only those who are actually capable of delivering will still exist. At that point, hopefully, we'll see a rise of new leaders who actally value excellence.

The point is, we can only afford to value hipness over experience in bubbles and it looks like this one's about to burst. Of course, I'm not from the future, so I could be wrong.

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

#649

Post by infinite8s »

swingbridge wrote: post #555
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…

The current tech bubble has some fundamental differences to the last one. Specifically, while some of the pain will hit public markets the vast majority of people left holding bags of burning crap this time around are the VC firms and other private investors. The SF Bay region is going to have an implosion but the impact on the broader stock market and US economy will be quite limited. In short, if you just bought a…

A lot of that private money/VC funds are institutional money chasing alternative asset class returns.

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

#650

Post by Swizec »

toomuchtodo wrote: post #646
Swizec wrote: post #423

Earlier quoted context omitted.

Closer to 45% really. But it's still cheaper than paying less rent and owning a car. Not having any dependents is also pretty handy in keeping money piling around instead of spending it. We also save a lot (and are healthier and save time) by cooking at home instead of going out to eat. So, really, we get to both live in downtown SF, and travel pretty much whenever we feel like it.

What's your reason for living in SF and still traveling frequently? Access to work in SF? I ask because I'm a remote worker for an SF startup, home base in a low cost of living area, but I travel frequently as well (but the home was purchased somewhere where the house is paid in full already and the monthly upkeep is ~$500/month).

Access to work is about the same as remote with social network in SF.

Two reasons why I choose to stay here: 1) building said network so I can go back to proper nomading easier, and 2) access to the startup lottery; nobody gives shares/options to remote workers and/or independent consultants/freelancers

Lottery is a nice potential upside with next to zero downside as an engineer

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