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Technology & Innovation

A Social Media Investment Bubble?

The last time valuations soared so high for companies like Groupon and Facebook with modest track records, or no track records, the trend line heralded the dot-com crash.

Groupon, a coupon-hawking website out of Chicago with less than two years of history to offer, is heading toward an initial public offering that may value it as high as $15 billion. Facebook, the popular social networking and privacy-wrecking website, is valued at somewhere between $50 billion and $80 billion by private-market reckonings. So it looks like Arianna Huffington sold herself cheap—she got only $315 million from AOL for her Huffington Post. What’s scary about all this, you ask? Simply that the last time valuations soared so high for companies with modest track records, or no track records, the trend line didn’t herald a “new world” or a “new paradigm” or whatever they’re calling it today. It heralded a crash.


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