First let's lay some resonant statistics.
LinkedIn in the campaign, which debuted less than a month ago, brought half his expected assessments, selling for over $ 95 per share, rather than the expected $ 45 per share. This is a great confidence in the market for social media marketing solutions.
Less than two weeks later, Groupon filed for IPO status. LinkedIn asking price was $ 175 million and was estimated at $ 9 (b) after his first day on the market. GroupOn asking price will be $ 750 m, which, if the evaluation of a LinkedIn in any predictive power — could imply that Groupon can be assessed at $ 38 billion when brought to market.
LinkedIn raised more money than Google its first day on the market, which is considering a professional networking tool Utility to Google — it seems absurd. GroupOn is a dwarf form of capitalization, Google saw when he was brought to market in 2004. And all the money builds to — that exactly? Both LinkedIn and Groupon will grow fast enough to carry out their evaluations?
LinkedIn in the projected income for 2011 is $ 500 million, which means that it is trading at 18 times projected earnings. Google trades at approximately 5 times its projected revenues. In other words to quickly grow a LinkedIn in ROI or its stock price will face adjustments sooner rather than later.
If the assessment of Groupon equally disproportionately, we can expect similar bind: grow exponentially, or face a correction soon. One can only imagine the market Icarus as a lust for rolled into Facebook.
All this made quite nervous that we are entering bubble, very similar to what is referred to, retroactively, dot-com bubble 1995-2000 media. Indeed debut LinkedIn tend to suggest that investors radically neumely and buying tech stocks prices, which will almost certainly need to be corrected at some point. It is hoped that this amendment would happen "sooner" seems likely given the level of paranoia, as in the media and the General level of anxiety on Wall Street right now.
The dot-com bubble was in a time when America, on average, was much more rich and carefree style. In the late 1990s was an unprecedented level of prosperity, it was a long time since the country was facing a crippling recession like the one we have and the Internet was an entirely new concept. This naivety, combined with the unusual — indeed, historically, the Singular is the presence of cheap capital, a situation ripe for a fiasco as the dot-com boom. It is worth recalling that bubble partly movement by remote day is a breed of capitalist that now seems as quaint and antique as an idea to start a website with domain catchy sounding and looking forward the money to begin gushing in investors at any time.
Just starting to come out of the worst market correction since the great depression, jaded and largely broke, we find ourselves in a situation that even remotely resembles the landscape in the late 1990s, and for this reason, among other things, the next tech boom — if that is what we are witnessing the beginning — you don't look anything like the dot-com bubble.
Here are five reasons why tomorrow's tech boom is unlikely to look anything like dot-com boom:
1. p/e ratioIn the late 1990s, the share price to earnings ratio S & P 500 jackknifed on the already high, 20/1, for an unprecedented 40/1. Today that number is about 1/8. It really is a PE ratio of LinkedIn in 18 — but that represents only one company. As already mentioned, that the ratio is likely to be corrected in a short period of time. In any case continue to emphasize this point, read the number two.
2. ' Get big or get lost ' against "Scalable solution"LinkedIn is a model that produces reliable profits. Their expected profits this year are $ 500 million. Canonical dot-com company "business model" — If you can call it "business model" — should be a sustained net loss (i.e., they do not contribute any money and they spent a lot). They justified this strategy imagining that they are "market share" or "share of mind" fantasizing that they are going to charge for their services later after their popularity to beat their competition. This was a brand of grandiose delusion that tech companies is now built on measurable, scalable solutions that produce reliable earnings is not shared.
3. venture capital to private capitalThe vast majority of the dot-com boom closed its doors, shut down their operations and disappeared off the indexes when they burned through their venture capital. Facebook, LinkedIn and Groupon clearly went far beyond this stage and all of these companies have a functional, measurable and credible business model. An example of the infamous the previous arc dot-com companies Boo.com is a, which burned through $ 185 m in the capital in six months before going into receivership. They have just launched their website a few months before completely burning through $ 185 million they received from venture capitalists.
4. changes in accounting practiceDot-com is very questionable accounting that allow them to make large profits, while they actually racks even greater losses. For example, InfoScape infamously reported profit of 46 million dollars, when in fact they lost 282 million. $. United States in 2000, just before the bubble burst and InfoScape reserves dropped from $ 1305 per share to $ 22 per share. It is unlikely that such oversight on behalf of investors may be incorporated in the State of high anxiety and awareness in the market today with its expectations of transparency.
5. real time measurement toolsDot-com bubble burst in May 2000, when the dot-com boom had put their quarterly earnings for the first quarter 2000 — identifying they made money during the Christmas season of 1999. It will never happen today as the income available in real-time for most social media platforms.
