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May 9, 2022 11:34 am

Layoffs and a Silicon Valley Sell-Off Create Shaky Low-Valued 'Unicorn Zombies'

"After years of sky-high valuations, Silicon Valley is engulfed in its worst sell-off since the 2008 stock market crash," reports NBC News. On Twitter, VC David Sacks (a former PayPal executive) even says investor sentiment in Silicon Valley is the worst since the late 1990s dotcom crash.After a pandemic-fueled boom sent tech names soaring, many of those businesses have seen the worst six months of their lives as publicly traded companies. Peloton, the exercise startup, is emblematic of this ominous reality: Its shares have cratered from a high of $163 at the end of 2020 to about $17.... Firms that had scored headlines in the past 18 months for raising millions of dollars to achieve billion-dollar "unicorn" valuations have announced layoffs. They include the celebrity video-clip company Cameo; the stock market trading app Robinhood; Thrasio, which buys and sells third-party brands on Amazon; and the employment group Workrise. Some people have begun to use the phrase "zombie unicorns" to refer to highly valued but shaky startups that might need new investors to rescue them. "A lot of this is about companies that never thought the VC gravy train would slow," Dan Primack, a widely read tech and finance columnist for Axios, wrote this week. The massive markdown is causing some observers to pause and reflect on the current state of tech. The mood has shifted: Our economic environment is less certain, and the ground on which the tech landscape stood is beginning to look, as tech executive and venture capitalist Dan Rose called it in a tweet, like an "abyss." NBC notes that early-stage tech companies "aren't profitable, relying instead on VC investments to cover expenses while they focus on rapid growth." And tech investor Zach Coelius tells NBC that while there had been an abundance of investors — and low interest rates — our current downturn in consumer demand (and the economy) coincides with an end to that explosion in funding. "Almost all the major public tech companies missed their numbers, and when that happens, the tide can turn really aggressively."

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