Social Networking ‘bubble’about to pop?

Signs of another 2000 dotcom like bubble are now appearing with the incredible valuations of Facebook, Groupon, and Living Social and Goldman Sach’s interest in the Facebook, and growth in the mobile application industry.  Industry observers warn that another investment bubble, similar to the one that ended in the 2000 dotcom bust, may be forming,
Beverly Macy, CEO of Gravity Summit, the social media marketing conference, and also author of “The Power of Real-time Social Media Marketing” spoke with news media on recent trends in social networking companies.  Macy first said that MySpace was one of the early success stories in social networking because it found its audience and gave them what it wanted, but now the company is on the decline and it remains to be seen whether it will die out completely.



Regarding Facebook’s recent mind blowing valuation of $50 billion when Goldman Sachs invested $500 million, Macy said the reason this is happening is that Facebook’s users keep growing from 500 million just last a month or two ago to almost 600 million users today.  She said there has been a huge, seismic shift in the way people communicate and connect, and to do even more than connect.  “now they want to shop on Facebook, they want to transact on Facebook, they want to share photos, they want share their lives”
Regarding possible dotcom bubble clouds on the horizon, Macy said the lesson from 2000 bubble is that companies must have revenue and be a real business to survive.  She said then, a lot of companies went public too early then had to delist, but today’s companies are earning revenue and they’re going to continue to earn revenue, so they can take their time”  She said there will be a few failures along the way, but many companies will “hit the ball out of the park.”
from - http://socialbarrel.com