Short Memories - Or None At All?

The table below illustrates some of the similarities between the 90’s dot.com bubble and the new dot.com 2.0 (social media) bubble. We can clearly see that the same pattern is emerging. So, yes, we probably do have a little POP coming. The question is will this one be as dramatic or have lessons from the previous episode been learnt??

Dot.com Bubble

1.    Companies’ stock prices sky rocketed by simply adding an “e” prefix or a .com to the end of their company name.

2.    Market confidence was based upon number of clicks (“eyeballs”) even though a majority of those clicks did not result in any revenue.

3.    P/E ratio thrown out the window.

Dot.com 2.0 (social media) Bubble:

1.    Companies’s stock prices acting similarly by adding social media to their description.

2.    Market confidence based upon user count, even though many users visit once a month or never at all after signing up.

3.    Our first case study LinkedIn had a first day high of $122.70 – a nonsensical 1,460 times earnings. As on writer put it, “[LinkedIn] has pets.com blushing in its grave”.