SAN JOSE — Silicon Valley’s tech companies are gaining value at a dramatic pace, a sign the technology and life sciences industries in the region have managed to prosper despite coronavirus woes that jolted the economy.
Starting in late March 2020, when the stock markets reached their low points during the COVID-19 outbreak, through the end of June 2021, the completion of the most recent quarter, the combined market value of Silicon Valley companies has more than doubled.
The stunning turnaround in value for publicly held companies in Silicon Valley and San Francisco — a list dominated by tech and biotech firms — was disclosed in a new report by the Silicon Valley Institute for Regional Studies, the research arm of Joint Venture Silicon Valley, a San Jose-based think tank.
“The pandemic was not a setback for Silicon Valley, the pandemic only increased the profitability of these companies,” said Russell Hancock, chief executive officer of Joint Venture Silicon Valley. “Quarantines wound up being great for tech companies.”
By providing an array of services such as remote meetings and teleconferences, Silicon Valley companies were able to avoid the type of downturn that gripped leisure, hospitality, and personal services sectors such as the restaurant, hotel, retail, salon, and fitness industries.
“There was no downturn for Silicon Valley,” Hancock said. “What happened was that we introduced an artificial intervention to shutter a portion of the economy. It’s a sad story and we still haven’t recovered. But the economy that produced this amazing market value increase was there before the shutdowns began.”
The report measured the change in value for public companies in Santa Clara County, southern Alameda County, San Mateo County, and San Francisco. The survey period stretched from March 23, 2020 through June 30, 2021. The report was prepared by Rachel Massaro, director of research for the Silicon Valley Institute for Regional Studies.
During that stretch of slightly more than 15 months, the market value of public companies in those areas, roughly defined as Silicon Valley and San Francisco, soared 129.1%.
On the day of the market lows in late March 2020, companies in Silicon Valley and San Francisco plunged to a COVID era low of $5.5 trillion, derived from the combined value of these organizations.
By the end of the trading day on June 30 of this year, the combined market value of the companies in those regions had rocketed to $12.6 trillion.
Over the same 15 months, the value of the tech-focused Nasdaq Composite Index jumped 111.4%. The value of the broad-based S&P 500 increased 92%.
“It was more than the tech companies in Silicon Valley,” Hancock said. “We should not lose sight that our biotech and life science industries were at the forefront of vaccines, massive computational processing, contact tracing, the quarantine.”
The boom in market value was fueled by a few of the biggest companies based in Silicon Valley, the report determined.
“Nearly three-quarters of the region’s aggregate market cap is concentrated in just 7% of public companies, 23 out of more than 300,” Massaro wrote in the report. “Apple and Google have market caps of roughly $2 trillion each.”