Liberty Media Chairman John Malone stated the scorching IPO market and hovering fairness valuations remind him of the dotcom bubble in the late Nineteen Nineties.
“There’s no question that the equity markets right now are so interested in growth above all other criteria and this is, like, the bubble in the late ’90s … through 2000,” Malone stated in an interview with CNBC’s David Faber. “It’s all about growth. This is a land rush right now. Profitability to be determined later.”
It has been a blockbuster yr for U.S. public-market listings, which simply surpassed an unprecedented $1 trillion marker, a document that greater than doubles 2020 ranges. Amid the IPO growth, many money-losing startups are ready to rating sky-high market capitalizations that some imagine are indifferent from their fundamentals. The fixation on future development and profitability sparked worries amongst buyers and strategists on Wall Avenue concerning the degree of froth in the market right now. The S&P 500 is up 25% this yr.
“If you have a lot of cheap money creating too much competition particularly in capital-intensive businesses, it can wreck the profitability of any business,” Malone stated. “There’s a car company [Rivian] that I guess is just going public that has a $130 billion market cap and hasn’t built a car yet.”
Rivian notched the second-highest valuation for a itemizing this yr after its providing elevated its complete by about $67 billion. Shares of the electric-vehicle maker at one level doubled in worth, buying and selling round $150 billion at its excessive. But, Rivian continues to be shedding cash and barely producing income.
The 80-year-old mogul stated he is spent his profession constructing companies with long-term horizons and stable fundamentals.
“I’ve always been a long-term investor and so I’m much more interested in building this business brick by brick, making it solid and sticky,” Malone stated. “‘How can you grow it,’ and, ‘how can you grow pricing power,’ and, ‘how can you defend the franchises that you’re building?'”
Malone constructed cable empire TCI in the Nineteen Seventies earlier than promoting it to AT&T in 1999 for roughly $50 billion. Malone is now chairman and largest voting shareholder of Liberty Media.
