Liberty Media Chairman John Malone said the sizzling IPO market and soaring equity valuations remind him of the dotcom bubble in the late 1990s.
Malone stated that “there’s no doubt that the equity market right now is so interested in growth over all other criteria” in an interview for CNBC. David Faber. It’s all about growing. It’s a time of land rush. Rentability can be determined later.
The U.S. has had a record-breaking year in terms of public-market listing activity. just surpassed an unprecedented $1 trillion markerThis record more than doubles the 2020 level. Many startups that have lost a lot of money are able score high market capitalizations despite the IPO boom. Some believe these numbers are disconnected from their basic principles. Wall Street strategists and investors were concerned about how much froth is currently in the market due to Wall Street’s fixation on profitability and future growth. The S&P 500 is up 25% this year.
Malone stated that if there is too much cheap money, especially in capital-intensive industries, this can lead to a loss of profitability. A car company is one. [Rivian]That I think is what’s happening, since the company has $130 billion in market capital and hasn’t yet built a car.
RivianIt was the most valuable listing in this year’s history, with a valuation that exceeded $67 billion. The electric-vehicle manufacturer’s shares doubled in price at one time, and traded at $150 billion at their peak. Rivian still loses money and is barely making any revenue.
He said that he spent 80 years building companies with solid fundamentals and long-term goals.
Malone explained, “I’ve been a long term investor all my life and I want to build this business brick-by-brick and make it stable and sticky.” Malone said, “How do you grow it?” and, “How can pricing power be increased?” and, “How do you protect the franchises you are building?”
Malone built cable empire TCI in the 1970s before selling it to AT&T in 1999 for roughly $50 billion. Malone is now chairman and largest voting shareholder of Liberty Media.