Are We In The Early Stages Of A Social Media Tech Bubble?

tech bubble

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What's up with all these social media companies filling for IPO's lately? I guess the spark was lit with LinkedIn which went public just 2 weeks ago now. Since 2 other major social media tech companies have filed the paperwork for additional IPO's - both Groupon and now Zynga.

Coming Social Media Bubble?

I hate to say the "B" word so early but of just the 5 companies that are planned to go public, the combined market value is north of $71 Billion. As you can see from the chart below, on a per company basis that is a extremely high even when compared to 1999 bubble levels.

Facebook does clearly make up the lion's share, but even LinkedIn is now worth more than the initial $2 Billion estimate on this chart - $7.6 Billion as of last Friday's close.

LinkedIn LNKD IPO Dud

LinkedIn, which went public last month, revealed that it earned just $15 million in 2010. Prior to that, LinkedIn was in the red every year since its 2003 inception -- except for a slight profit in 2006. Really it's no wonder why the stock has basically

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Next In Line Please...Groupon

We have already had some heated discussions about Groupon on our Facebook Fan Page this weekend...

Groupon's river of red ink is even deeper than LinkedIn's and yet the buzz is already swirling. Groupon filed for its IPO on Thursday, revealing that it lost $413 million in 2010 and lost almost $114 million in the first quarter of 2011. Yet current predictions are that the company will be valued at more than $20 Billion on it's IPO day?

What Do YOU Think?

Do you think we are in another "bubble in the making?" Add your comments below - irronically via Facebook - on whether you think we are in the early stages of a Social Media bubble?

About The Author

Kirk Du Plessis

Kirk founded Option Alpha in early 2007 and currently serves as the Head Trader. In 2018, Option Alpha hit the Inc. 500 list at #215 as one of the fastest growing private companies in the US. Formerly an Investment Banker in the Mergers and Acquisitions Group for Deutsche Bank in New York and REIT Analyst for BB&T Capital Markets in Washington D.C., he's a Full-time Options Trader and Real Estate Investor. He's been interviewed on dozens of investing websites/podcasts and he's been seen in Barron’s Magazine, SmartMoney, and various other financial publications. Kirk currently lives in Pennsylvania (USA) with his beautiful wife and three children.