Groupon and Facebook Both Deflate to New Lows

Posted by Knowlton Thomas

There is probably some sort of social media bubble. But it doesn't seem to be bursting. It just seems to be deflating.

Nothing as staggering as the dot-com crash is going on in the markets today. In fact, they're as quiet as they've been since 1950. But a lot of recently IPOed tech stocks are crumpling like paper beneath the clenching fist of one powerful idea: rationalism.

Facebook, most people rationally thought after the IPO hype, is not worth more than $100 billion. Which is why the stock has sank to half its market debut price, a lowly $19.87, with a market cap of around $50 billion. Today's lock-up expiration, which allowed original shareholders to sell shares (optionally!), triggered FB sink to over 6%.

Case number two is Groupon. Google once offered to buy the company for $6 billion. Groupon refused. Then they got into some accounting troubles and legal troubles and analysts started criticizing the sustainability of their business model. They forged ahead and went public at $20.

A couple quarterly financial earnings reports later and GRPN sits at $5, a full 75% below its opening mark. Google is either laughing or going "phew!" in relief or both. 

 

Techvibes interviewing Groupon founder and CEO Andrew Mason in his glory days.

 

But most companies are killing it. LinkedIn, another recent major tech IPO with a business model not unlike Facebook, is performing superbly. And Aol, an ancient company (by internet standards) has made impressive gains this year too. And formidable giants, such as Apple and Google, have managed to hit all-time highs this month despite all this talk of a tech bubble.

When rational thinking prevails, bubbles don't grow big enough to burst. They just get the helium sucked out of them by logical investors and consumers. That's what's happening today. 

As a bored cop might say at an uninteresting crime scene to passersby: "Nothing to see here, folks. Move along."

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Knowlton Thomas

Knowlton Thomas

Knowlton is the managing editor of Techvibes. Based in Vancouver, Knowlton has been published in national publications and has also appeared on television and radio. Previously he was an editor for New Westminster weekly The Other Press and served on its board of directors. When not working, Knowlton enjoys playing tennis, hiking, and exploring weird side streets. more



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