Between 1999 and 2000, the big players of online commerce sites fell as their public traded companies fell into from their effects of the great Internet bubble burst. The most commonly remembered being Pets.com where shares, which had peaked at $11 a piece, were worth less than 60 cents by the time they 404’d for the final time.
While not at the scale of the 2000 disaster, the unfavourable stock market inauguration for Facebook suggests backers are not prepared to relive such an event despite immense prospects for social media.
Facebook began at $38 per share but within a week lost 16% in value. Just like Pets.com this was after a much-hyped campaign going in sync with an initial public offering, the biggest by a technology company, of over $16 billion USD.
It seems people have learnt that hype does not necessarily mean result. Facebook mainstreamed social networking and many have strong ties and even reliance on the network to drive their own businesses.
An example being Zynga, the social gaming distributor responsible for Words with Friends, has reported a loss of 35%. Yet the social professional network LinkedIn has essentially doubled. With that we can see that this is certainly not the end of social media. Expansion and growth is on the horizon.
Investing $150 billion between 1999 and 2000 has given investors new sentiment that will prevent a bubble from forming. The people have learnt their lesson and now it seems the social network giant is gaining a lesson themselves; that just like on Facebook, sometimes going public isn’t the best ideas.