JohnBlog

Lend me your mind's ear — communications and portals

Of tech bubbles, valuations and IPOs

with 2 comments

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.

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2 Responses

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  1. Even bankers believe web company prices are inflated!

    Anonymous

    July 14, 2011 at 5:22 am

  2. 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


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