Tag Archives: IPO

Is the Social Media Bubble about to burst? YES.

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Late last year, content mill/media congolomerate Demand Media (DMD) went public and had its IPO. Afterwards, other companies such as LinkedIn (LKND) followed, with others such as Groupon and LivingSocial are still planning theirs. I also might add that Demand isn’t doing as well as investors hoped.

Problem is that these companies are being announced at prices far higher than they make profit , with LinkedIn alone being priced at 45 times the amount of its revenue, and Twitter 50 times its revenue…talk about speeding past the guardian angel.

As this trend seems to continue to spread, there’s talk of a bubble. THAT bubble. You know, the one that took out so many Dotcomcorps back in 2000-2001? The argument that people are spending more than they should on these companies, and they they will eventually fail.

People are wondering if this is really a problem or not. Well, let me just say this…

This is a bubble, and it

WILL

EVENTUALLY

BURST.

I’m sure there’s social media pundits across the world who’ll call me a cynic/pessimist/negative nancy, etc (all forgetting that the negative person exists to tell them that jumping off cliffs will probably kill them) in saying this, but somebody needs to say this. When you spend more money on something than its worth, chances are it won’t deliver. Most of these companies have no idea how to monetize. I wonder if they even have a plan.

As we saw with the last bubble, only a few companies will survive. I fear, however, that this time the people that will suffer are the masses who refer to themselves as Social Media Consultants/Ninjas/Rockstars/Titans/Sultans/Gurus..Or Any other else Social Media titles me and Jason Sem come up with in the next year or so.

We brought this on ourselves. With everyone and their mother calling themselves a social media rockstar, supply ended up overwhelming demand. When that happens…well, you saw what happened with the housing in 2008.

Honestly, I’m going to start figuring out how to build up my know-how in general marketing, as well as try to figure out something else. I don’t think the Social Media gravy train is long for this world.