Are we experiencing a tech bubble in shares of social media companies?
When LinkedIn recently went public with a blockbuster IPO, its shares were priced at $45 and they skyrocketed to over $100 in the first day of trading, a valuation of $8.9 billion. Hysteria ensued about the ballooning stock price amid warnings about the formation of a new speculative bubble in tech stocks. Its shares have since come down, but the last time I looked they were still a very healthy $88 per share, enough to please anyone who was in on the initial public offering — and then some.
In addition to LinkedIn’s IPO, there have been some other recent developments in the world of social media finance:
- Microsoft purchased Skype for $8.5 billion.
- Facebook’s valuation is now $75 billion, prompting litigants to come out of the woodwork claiming that Mark Zuckerberg promised them a part of the company back when he lived in a dorm at Harvard. The company is projected to be worth $100 billion by the time it goes public in 2012.
- Groupon may value its IPO at $15-20 billion.
- FarmVille creator Zynga’s IPO may only be a couple of weeks away; its latest valuation is $10 billion, which could climb even higher after the offering.