LogFAQs > #965883057

So to explain further, unprofitable tech companies that lose money year after year constantly need more money to not shut down. They can get that in two ways - borrowing and issuing more shares. Well, the market crash has pretty much shut down the second option. To raise the same amount of money after your stock price has plunged 90% you need to cause 10 times as much dilution, which drives down the share price further.

I think the effect of higher interest rates on borrowing for tech companies is overblown - whether they're borrowing at 3% or 6% isn't going to make a huge difference in the long run especially if the higher interest rates don't last that long. But unprofitable companies find it hard to borrow anyway, and tend to finance operations by issuing shares. And that route has all but closed, causing real damage to companies without either the profits to finance their own operations or a large cash reserve.