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.
Written by johnrondina
May 31, 2011 at 12:17 pm
Posted in Uncategorized
Tagged with Business, Dot-com bubble, Facebook, Initial public offering, IPO, LinkedIn, market cap, social media, social media bubble, stock price, tech bubble, Twitter, Warren Buffet, Zynga
2 Responses
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Even bankers believe web company prices are inflated!
Anonymous
July 14, 2011 at 5:22 am
Valuation is definitely important. However, it’s important not to paint every company with the same brush — even within the same sector. Especially now, that market valuations have improved on average.
Thanks for the comment!
johnrondina
November 17, 2011 at 7:24 pm