Social Media and IPOs

Have you ever wondered why many IT social media outlets lately have gone from privately owned companies to companies that are going public (via IPO). Then if that wasn’t enough, they are actually trying to buy other social media outlets? I don’t think anyone from Facebook or Twitter have looked at history of what’s happened before – remember when there were IT firms all over and all of a sudden the dot-com bubble burst? The way its going, the recent deals Facebook and Twitter have done or have talked about doing will lead to the same thing.

Facebook

Surely, everyone has heard of this IPO since it was filed in February 2012, which was 8 years after it was created. I know when I heard about it, it was doomed. It started to trade in late May 2012 and the company was valued at $5 Billion dollars. As of May 2013, its sales alone are now over $5 Billion dollars and listed as #118 in Market Value as listed by Forbes.

As we know, it did not go well for Facebook and some even questioned why Mark Zuckerberg did this to the company. As we know, Facebook shares were driven to $45 before the IPO, even though the company’s initial valuation was much lower. However, once the marketing of the IPO was done, I believe this caused people to be eager to want stock in the company and this pushed the price upwards as demand usually does for limited products. It was a game of supply and demand and this time out the demand won.

It took awhile, but now things have leveled out with Facebook’s share prices. However, those of us who use the networking site, have been annoyed by more marketing and changes that are almost constant. I like, and in some situations love change, however they are pushing changes to the maximum.

In some cases Zuckerberg, I think, let the power go to his head. He’s been trying to buy Snapchat like Facebook had with Instagram. However, for the moment, Snapchat rejected his offer and it makes you wonder why? Snapchat is growing – 350 million messages per day, up from 200 million in June – however is it because they want to keep the company to themselves (as its only 3 years old) or are they waiting for it to grow up (as the others have done) and/or hit a magical number on the Social Networking scale? That’s to be seen, but for now its interesting that the company wants to just keep going along as its been.

Pinterest & Getty Images

Have you noticed lately on Pinterest, some images give you much more information? This is due to an agreement they have just started. You will see things such as the metadata that Getty has on file for that image — including the description, photographer and date taken will appear with the photo. This is due to marketing and the way to get images that are seen also marketed from the place that’s put them out there. Good idea or bad do you think?

Of course in doing this, has increased the company’s value – the company’s valuation as high as $4 billion its been written. This deal was close on Friday 25th October 2013, so the information should be out there or shortly. I do have to ask, as in 2013 its been ranked as the 3rd most popular Social Network site, I wonder how much longer until it too, goes the IPO way?

Twitter 

On 8 November 2013, Twitter started its IPO or initial public offering and was given the figure of $US14.2 billion the day before it started trading as TWTR on the stock exchange. Its value as a 6-year-old social network had been due to it’s an advertising business and increased its ranking to 2 in the social media rankings for 2013, which is just behind Facebook.

However, since the IPO, there has been some talk the day after the IPO that Twitter’s IPO has been a failure due to it opening at one set price, rising (as what happens when the IPO had been marketed, like in the case with Twitter), only to fall to below the opening set price. Why didn’t it do the price do the usual thing of holding its value? It could be that it was overvalued (due to the marketing beforehand) or it could be the people who valued it thought more people would support the company due to its popularity.

Look at it this way, Chris Messina could have patent the hashtag (#) concept and didn’t. Good choice or bad do you think? He states:

“…claiming a government-granted monopoly on the use of hashtags would have likely inhibited their adoption…” and  “I had no interest in making money (directly) off hashtags.”

Could it be that someone out there didn’t want to make money? Hmm I think it was more that he wanted his overall company (Twitter) to increase in size and this was a great way to go about it. However, behind closed doors I bet he’s swearing due to everyone getting in to using the hashtag idea! Then again, he has just made a bucket load of money by doing the IPO.

In conclusion, we can see what’s been done and what is in the works in Social Media, but we have to keep asking ourselves by using these sites – do we keep wanting to put our information out th

Social Media bubble?

ere for these companies to be made public or not? I know we all love using them because they are free, but does that freedom mean that our information, and in some cases our money (if we choose to invest with these companies), need to be tested? By using these sites, we are agreeing these companies can use our information, so just keep that in mind.

However, also keep in mind these companies as they are hitting either an age (it seems like people want to buy these companies from the age of 3 years and up) or a ranking on the social network list and then either selling or going for IPO. When there are enough, this could be another bubble that bursts like dot-com bubble in the years 1997-2000. I do know Social Media is here to stay. In what format I don’t know, but I do know if these companies are not careful, we are headed for a Social Networking bubble bursting – can you imagine what you can tweet in 140 characters if this happens?

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