So, how are those initial public offerings looking now? Facebook’s IPO was the largest in Internet history, and at its peak reached a market capitalization of $104 billion. A truly staggering number for a tech start up just eight years old. Zuckerberg rang the bell and after a day trading it held at $38.23 – and from there it went all a little downhill with a year low of $18, never attaining the IPO figure so far.
Though with their recent earnings having shown their ability to monetize their mobile offering, an upward trend may be in the sights for Facebook, something investors in the startup would welcome with open arms. While Facebook is better off than it was, reporting $1.81 billion in revenue in Q2 2013 in comparison to $1.18 billion in Q3 2012 – only time will tell how it fares in the next few quarters.
Zynga, the social gaming behemoth, began trading on the NASDAQ at $10, rose to $13.39 and then, once again, it was all downhill from there. Zynga hasn’t helped itself, firing over one hundred staff during an Apple keynote to lower the exposure, and then again letting go of another 18% of the Zynga workforce, around 520 employees to make a leaner business, aiming for the mobile market more and more. With it trading at $2.5 – it’s fallen from grace. Will it make it back to IPO levels?
Zynga is known for its links with Facebook, and both Facebook and Zynga have been having a troubling past twelve months – Facebook is losing the edge in the social networking field, it’s becoming more of a utility, something we’re all using because everyone is on there. Facebook has become something we’re using grudgingly because we feel we should – who knows, someone, somewhere, may be creating the network or product that usurps it from the social networking market for once and for all – let’s just hope that Facebook acquires them within moments of finding out their gaining traction.
Acquisitions continue to see huge funds leaving the pockets of the tech giants – Instagram went for $1 billion in cash and stock. Tumblr headed to Mayer’s new lair of Yahoo for a solid $1.1 billion. Yammer ended up in the hands of Microsoft for $1.2 billion in cash. These acquisitions are nowhere near the scale of the dot-com bust of the 90’s, with Yahoo’s staggering purchase of Broadcast.com for a serious $5.7 billion – it was one of the great dot-com busts and now Broadcast.com simply redirects to Yahoo.com. Yahoo appear to have a history of making some incredibly costly mistakes, GeoCities springs to mind with Yahoo putting up $3.57 billion in stock and taking control of the company, with its demise coming in 2009, ten years after its acquisition.
The startup scene in Silicon Valley, as well as across the pond in Europe, and now spreading into the Middle East, appears to be fuelling the air of the startup bubble – venture capitalists money is being poured into new startups left, right, and center and there isn’t a day gone past that you don’t hear about another startup raising X amount in another round of funding.
There is a lot of potential for huge growth and for the technology sector to continue growing, but seriously inflated overvaluations are dangerous. Snapchat, a business that’s just two years old and has zero revenue is currently being valued at a staggering $860 million. The venture capitalists are afraid of missing out on the next big thing – big valuations with little revenue have seen an increase, with the precedent of Instagram setting the tone. Will we see the acquisition of Snapchat to a competitor shortly?
With the IPO of Facebook and the subsequent collapse of share prices, it’s fair to say we’re not in bubble territory yet – Google’s share price continues to steadily rise, perhaps within the next twelve month it will pass the £1000 mark. They’re a dominant giant and with the likes of Android in tow are hopeful about continued growth – during Google I/O this year, Larry Page’s unexpected speech gave a sense of both the passion and the commitment – their competitors are feeling the strain with the likes of Microsoft feeling the pressure mounting with services driving growth more and more.
The technology industry is spending more and more to catch the consumer’s eye, with a 30% year on year increase from Q1 2012 to 2013. The tech giants have some big marketing budgets and they’re not afraid of showing it off. We may just be on the beginning of the curve, one that will see some serious winners yet we’re not yet seeing the hype that surrounded the dot com bust of the 90’s with so many IPOs creating boom or bust opportunities though there is just a hint of soap in the air with the acquisitions of late. Time will tell if we’re likely to see another dot com bubble, is a $2 billion acquisition coming soon?