Has the Second Dotcom Bubble Started?

An article at the Guardian asks whether the exceedingly high valuations of social tech companies signify the arrival of a second dotcom bubble. Quoting: "Every week, one of the new generation of internet firms seems to attract a sky-high valuation. Zynga, the social-network games company that has tempted millions to grow virtual vegetables in its FarmVille game, has been valued at $9bn (£5.54bn). Profitless Twitter is said to be worth $10bn. Groupon, vendor of online discounts, rejected a $6bn offer from Google and is considering a flotation with a potential valuation of $15bn. Tech-watchers say this is just the start: the real boom will come when Facebook, the head boy of the new dotcom frenzy, goes public, probably next year. ... The last dotcom boom really took off after the flotation of the internet software company Netscape in 1995. Patrick says this time it's likely to be Facebook that lights the fuse. So far, private investors have been locked out of the New Thing. But JP Morgan is setting up a fund, and Goldman Sachs recently tried to get its clients' money into Facebook."

Comments

dotcom bubble

[devxo]

During last dotcom boom companies had no usable plan to get income. However, Facebook is advertisers dream with its extremely targeted advertising system, Zynga has a huge amount of casual players and both advertising and direct payment system and groupon receives good money from the stores. They all have business plan. They might have to work on them a little bit as they're still so new companies, but they definitely have one that work.

That's why it's not a second dotcom bubble - it's just that the masses have started using internet a lot more than before and web itself has changed.

Re:dotcom bubble

[Anonymous Coward]

That's why it's not a second dotcom bubble - it's just that the masses have started using internet a lot more than before and web itself has changed.

Not the Internet - Facebook. All this money stands or falls on the success of Facebook and that's a brand that's (hopefully) at it's peak. This isn't a dotcom bubble, it's a Facebook bubble.

Re:dotcom bubble

[Weezul]

You know, houses are valuable possessions too, just like the various commodities that've made messy bubbles before. Any sectors of stock, bonds, commodities, or higher order derivatives can reach bubble proportions.

Re:Picard Facepalm

[mcvos]

Facebook's valuation is a real mystery to me. It's valued at $50 billion. It has 500 million users, which looks like a lot, but that puts it's worth at $100 per user. Do you think you are worth $100 to facebook? Do you know anyone who might be?

The value of a company is generally about 10 times its profit, so facebook should be making $5 billion profit a year, or $10 per user. And that should be profit, not revenue.

$50 billion is also about a third or a quarter of what really big companies like Google, Oracle, Apple and Microsoft are worth. Is facebook really that close to that league? I think anyone buying facebook stock at this price is insane.

Re:The economics of plenty

[AlecC]

Not necessarily "perfectly good". A structurally sound house in the wrong place is not perfect and not really good. In a way, this mirrors the soviet failure, rather than capitalist problems. The soviets assumed that if a factory was working at full speed producing whatever had been specified, it was doing good work. But producing obsolete or excessive goods is a net loss. If you could move houses from the rustbelt to the sunbelt, your observation might be true. But you cannot, and it is better to scale back the shrinking communities to a functional size than continue to mimic a city with four times the population.

(Or you can try to relocate jobs to where the houses are. if you succeed in that, your fortune is made, just on the lecture circuit).