Of tech bubbles, valuations and IPOs

Lately, the Internet is full of buzz regarding social media and online tech companies and the potential for a new online tech bubble.

LinkedIn’s 2010 sales are about $200 million. Its current stock price reflects a market cap of $9 billion. That’s 45 times revenue – a level that sits in nosebleed territory. While companies with such high market capitalizations or expected valuations are few, these valuations are still high. It’s also important to realize that such valuations apply to a select few tech companies, mostly involved in social media.

Still, there will soon be a flood of social media IPOs. Facebook thinks they’ll get a $100 billion valuation when they go public in 2012.

Now, what would investor extraordinaire Warren Buffet say about these valuations?

And while we’re at it, let’s take a look at the demographics that have vaulted social media into the public’s (and investors’) consciousness.

Follow @JohnRondina

Advertisements