Valleywag
Is it actually possible to have a stock bubble without a public market? It certainly looks like it. Myspace and Facebook, the two leading social networks, are both private: one a unit of Rupert Murdoch's News Corporation; the other controlled by its founder, Mark Zuckerberg, and venture capitalists. But that hasn't stopped the two exuberantly growing rivals, the hottest new internet companies since Google, from talking up their valuations. Rupert Murdoch, whose company acquired Myspace for $580m in 2005, boasted the company had grown tenfold in value; not to be outdone, Peter Thiel, the financier who put the first significant investment in the college social network, said he wouldn't sell Facebook for less than $8bn. The latest one-upmanship: the rumored approach by News Corporation to Yahoo, a proposal to merge their internet assets, implies a value on Myspace of $12bn, double the number News Corporation was touting six months ago. At this rate, we'll experience the inflation of expectations, and the burst of the bubble — before retail investors even discover the wonders of Facebook apps.
The social network bubble
Is it actually possible to have a stock bubble without a public market? It certainly looks like it. Myspace and Facebook, the two leading social networks, are both private: one a unit of Rupert Murdoch's News Corporation; the other controlled by its founder, Mark Zuckerberg, and venture capitalists. But that hasn't stopped the two exuberantly growing rivals, the hottest new internet companies since Google, from talking up their valuations. Rupert Murdoch, whose company acquired Myspace for $580m in 2005, boasted the company had grown tenfold in value; not to be outdone, Peter Thiel, the financier who put the first significant investment in the college social network, said he wouldn't sell Facebook for less than $8bn. The latest one-upmanship: the rumored approach by News Corporation to Yahoo, a proposal to merge their internet assets, implies a value on Myspace of $12bn, double the number News Corporation was touting six months ago. At this rate, we'll experience the inflation of expectations, and the burst of the bubble — before retail investors even discover the wonders of Facebook apps.
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8:46 AM on Wed Jun 20 2007
By Nick Denton
1,355 views
6 comments
Comments
Amazon's market cap: $29B
Pass the bong, gents.
Oh...these are stock bubbles? I thought it was a hot air balloon race.
"before retail investors even discover the wonders of Facebook apps."
heh
I'm not so sure. Given the real revenues and margins that these businesses are generating, not to mention the growth rates, those valuations don't look that crazy. Given that more than 10% of the time that people spend on the web is now on Facebook or Myspace, seems logical that they should represent a fair slice of the value as well...
Isn't MySpace personal ads for high school kids and Facebook for those in college? When whatever generation using them grows-up, I'm sure the next will have something different. Hence, perhaps, another definition of an illusionary bubble?
IOW: Yahoo! will be around, long after these others have gone.
Nick, I'm disgusted by your bitter pot shots at people who are grasping the nettle instead of stitting back and compaining.
I say put up or shut up. In the spirit of the valley and its denizens I propose a venture borne of greed and self interest. Part pyramid scheme, part stock scam and part social network, we start a web site whos membership entitles you to stock in the company (No purchase nesessary so with a bit of luck the SEC will leave us alone). We give early joiners more stock to encourage people to join and a limit on the total amount of stock. As the membership grows we approach some VC sharks, for a little cash and a lot of PR. Membership snowballs, sell to the Googs, liquidity event, Coke party.
Who's with me?
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