In Silicon Valley, several businesses' values dropped

In recent years, low interest rates on loans have helped many start-ups become unicorns, or companies worth $1 billion or more.Thousands of startups entered the fray with the dream of capturing the market through software, but in the second half of 2022 and the beginning of 2023, the dream of these companies seems to be shattered when faced with reality.

18 months ago, used car retailer Carvana was at the pinnacle of business. Its market value had reached 80 billion dollars (6.5 lakh crore rupees). Now its value has fallen by 98% to just $1.5 billion (Rs 12,215 crore). The company is struggling to save itself.

In Silicon Valley, several businesses' values dropped

Carvana Company, like many other startups, attempted to use modern technology to transform the traditional car market.Its used car sales increased by more than 25% in the first year of the pandemic. To make up for the shortfall in supply, Carvana bought cars at exorbitant prices from customers.

made multistory showrooms in many cities. The caravan borrowed a large amount from the market at a high interest rate, but as soon as the pandemic ended and the interest rates increased, the sales of the caravan declined. During the pandemic two years ago, Salesforce paid $ 28 billion (2.28 lakh crore) for an office communication tool called Slack with a $ 10 billion loan, but the company has since laid off 8000 employees, the majority of whom used Slack.

Even big companies like Amazon are not untouched. Its stock market value has dropped by about $1 trillion since April 2020.The company is laying off 18,000 employees and shutting down operations at several locations.

Many other tech companies are seeing their fortunes reverse gear and their dreams fade away. They are engaged in measures like retrenchment of employees and cost reduction. Sam Abulsamid, chief analyst at Guide House Insights, says the entire tech industry was built on cheap debt over the past 15 years. Now they are facing the reality. Their sales have come down, and the cost of debt has gone up.