CNBC is reporting (along with everyone else) on the social media bubble looming amidst massive IPO deals. The alleged bubble is not a new concept to the social media industry, with some strategists talking about potential warning signs as far back as 2008. But with major deals coming into play, that potential bubble is coming out of the woodwork.
First off, Microsoft’s $8.5 billion purchase of Skype last week had critics buzzing, calling the giant figure inflated and off the mark. We’ll have to wait a while to see if the purchase was a bad move, but…$8.5 billion? Really??
Next, we’re seeing LinkedIn make its way to the NYSE with an IPO reaching $3.36 billion. This is over 10 times the revenue LinkedIn made in 2010…so where is the added value coming from? Likewise, Skype was valued at 12 times the amount of yearly sales.
If there is a bubble on the way, the biggest question falls on LinkedIn, Facebook, Groupon, and Twitter: what’s the real value?
Though out of these four media giants, Groupon seems to be the most easily toppled. It drives the worst kind of customers to businesses, has tons of knock-offs, and has been recently valued at a possible $15 billion. We’re not buying it.
So, if the social media bubble does burst…we’ll be over here where it’s safe.