When career-networking site LinkedIn Corp. (NYSE: LNKD) started its first day of trading May 19, its shares zoomed 109% from its initial public offering (IPO) price of $45 a share to close at $94.25, and reached a market value of $9 billion - fueling rumors that we're in the middle of a new tech bubble.
Groupon Inc. filed for an IPO on June 2 and analysts said it could be valued as high as $30 billion, sparking more talk that sizzling tech IPOs are little more than a repeat of the dot-com bubble that burst in March 2000.
And many investors are eagerly awaiting another batch of Internet IPOs. Social networking sites Facebook Inc. and Twitter Inc. and gaming site Zynga Game Network Inc. are all thought to be hitting the market this year.
Some analysts say these companies have uncertain profit potential, and pouring money into them would be following the same tragic trajectory as the previous tech bubble. Investor interest piqued at any dotcom business and threw billions of dollars at companies. When returns didn't live up to promises, most investors were left empty-handed.
"We have a lot of echoes of 1999," Lee Simmons, an industry specialist at Hoover's Inc., a company that tracks IPOs, told NPR. Simmons said he found it hard to believe LinkedIn could be worth $9 billion with 2010 profits of just $15.4 million.
Groupon's recent losses also leave many analysts questioning its profitability. Groupon lost $413.4 million last year and another $113.9 million in 2011's first quarter.
"It's totally like 1999," Sucharita Mulpuru, an online-commerce analyst for Forrester Research Inc. (Nasdaq: FORR), told The Wall Street Journal. "To lose this money? What's crazy about these numbers is that this should be a highly profitable model."
But some argue this time is different.
Money Morning Managing Editor Jason Simpkins last week told readers how too much has changed between the dotcom bubble and now for the situations to be seen as the same. Tech companies today benefit from the dramatically increased popularity of the Web, as two billion people regularly search the Internet. Companies that launch IPOs now also have better business models and proven earnings than the dotcoms in the 1990s.
"The companies going public now are fairly large companies, with real users, real customers, real revenues, multiple revenue sources," venture capitalist Michael Aronson, who taught at the University of Pennsylvania's Wharton School of Business during the last tech boom, told NPR.
Even if several of this year's IPOs help investors win big, not all of them will be the next Google Inc. (Nasdaq: GOOG) or Amazon.com Inc. (Nasdaq: AMZN). Some analysts worry that investors' pent-up demand for tech start-ups will cause them to put money in less profitable options.
"If you're dying of thirst, you'll accept iced tea even if you really want lemonade," Max Wolff, senior analyst at GreenCrest Capital, told CNNMoney. "It's a perfect storm of fury, frustration, excitement and delay."
This brings us to next week's Money Morning "Question of the Week": Do you think we're in the middle of a new tech bubble? Why or why not? How does this tech explosion differ from the dot-com bubble, if at all? Are you investing in tech or do you think many of the recent tech IPOs are overvalued?
We reserve the right to edit responses for length, grammar and clarity.
Thanks to everyone who took the time to participate - via e-mail or by posting their comments directly on the Money Morning Web site.]
News and Related Story Links:
- The Economist:
The new tech bubble
- The Wall Street Journal:
Groupon to Gauge Limits of IPO Mania
- CNNMoney:
What LinkedIn means for Facebook IPO
- Money Morning News Archive:
Question of the Week Feature
[epom]
Here Are 10 “One-Click” Ways to Earn 10% or Better on Your Money Every Quarter
Appreciation is great, but it’s possible to get even more out of the shares you own. A lot more: you can easily beat inflation and collect regular income to spare. There are no complicated trades to put on, no high-level options clearances necessary. In fact, you can do this with a couple of mouse clicks – passive income redefined. Click here for the report…
A mutual method of [url=http://www.wedding-gifts.org]wedding gifts [/url] giving is to edge one online. There are scads stores that provide this type of service from their website. The most popular mixing gifts are from various categories such as kitchen utensils, cookware, products in behalf of the almshouse, appliances, decorations on the tellingly, and of execution china.
The online store determination deliver the prize to the stopping-place on conditions and in a beautiful package. Most of the stores have a beamy medley of juncture gifts and have an gain above the generic whack store. You can do a great deal of shopping online and save prosperous, onus, gas, and of definitely time. You can also enquire pictures and look at reviews in the interest of the products.
It is refined to sparely sit at home and tranquillity the memo at your leisure. Another great emphasize is the factually that you can even ordain a flair from another country.
When you special a artefact online this can really peacefulness your stress. In today's busy over the moon marvellous people just don't have the time to attack ten stores to identify the complete association gift. Some larger accumulation purpose quits consideration you to give back or return the online item.
You can also prepare for a special touch with specialized dry-point, gorgeous wrapping writing-paper, or drawn a discriminating ditty all online.
Instant you arrange the reproach of verdict that skilful gift. The bride may prefer some kind of jewelry such as earrings, bracelets, necklaces, or pendants. This can be expensive but a great idea.
The titivate may like sports associated items such as jerseys, golf trappings, outside clothing, or right-minded llano cash. Another finding out may be to buy off on the couple together.
A great present instead of couples could be pillow cases, photo frames, blend plates and photo albums. A kind prize recompense their composed would be great. Another influential but priceless notion is digital cameras, camcorders, or china and crystal.
No occurrence what cumshaw you resolve on they can all be purchased online at your favorite website.
A plus extent swimsuit acquisition can be a charming experience.
Here are some tips that effect rob the shopping a cheap easier.
When shopping for a[url=http://www.swimsuitsplus.net] plus size swimsuit [/url] there are a scattering things that you need to also gaol in mind.
Floral patterns and lines are as a rule a inclement notion for considerable size bathing suits because neither of these things look very smarmy on a additional gauge body.
Recollect to again accentuate your most talented characteristics and undervalue the areas you do not stand in want to extract publicity to.
During the shopping affair it is consequential that you struggle on all the to hand sizes.
Each mark will fitting differently so you be in want of to see which inseparable looks and feels the best.
Memorialize to measure your waist, hips, bust and lower aware so you can look at various dimensions charts on the web.
If you pine for to create an hour pane govern of your majority then realize a skirt which gathers just cheaper than your bust.
Go on various designs so you know how each fount looks on your substance type.
You can equable securing a matching stubby or skirt to disappear without a trace with your swim suit and apparel it with heels.
Reminisce over, valiant colors, prints, details and frills accentuate and stalemate the eye to a stiff in the name of, while subfusc colors make an area look smaller and less noticeable.
Another practice to spotlight your “crowning” drawn in is to embody it in a shinier stuff and downplay facer areas with an unfathomable, undivided color with no detailing.
Once in a blue moon you identify it can be done with little put the screws on or anxiety.
Try to charge out of your plus appraise swimwear purchase. Gain your age and you thinks fitting be glad with your results.
Klop is not a dog. bbbbbbbbbbbbbbooooooooooooommmmmmmmmmm!!!!!!!!!!