This Year's Social Media IPOs
At first glance, the field of social media appears to be the Internet's next big boom-- and it is. As services grow and diversify, the field is evolving into a legitimate industry, as evidenced the the increased demand for social media analysis. As an October Bloomberg Businessweek article highlights, companies are going to increase spending on online data to $840 million-- more than double the amount spent in 2010.
At the same time, business forecasters suspect that the social media industry may follow in the footsteps of the dot-coms-- that is, we could be looking at signs of the next bust.
An Investopedia article lists "illiquid securities" as a sign of an impending bust. In other words, social media businesses aren't yet traded on public markets, and values have risen rapidly.
This Investopedia article begs the question: are social media businesses really that unstable? A Business Insider slideshow suggests the opposite-- that 2011 will be the year that social media companies make their marks on publicy traded markets. The following is a snapshot of who's planning to go public:
1. LinkedIn. This professional social network has filed to go public.Â In the last year, the company has grown rapidly with $161 Million in revenue and $10 Million in profit; however, 2011 will likely be an unprofitable year for the popular social network. Even though LinkedIn projects slower revenue grwoth, they are still planning to go public.
2. Renren. This six-year-old social network is the Chinese equivalent of Facebook. The company started out as an exact copy of Facebook, and over time, it has evolved into a community of more than 160 Million members. Its demographic includes college students and it generates revenue through banner ads and referral marketing.
3. Groupon. Established in November 2008,this rapidly growing company may have an IPO that is bigger than Google's.Â The deal of the day website earned $760 Million in revenue in 2010. Currently, Groupon caters to a number of international markets including the United States, Canada, Brazil, Germany,Greece, France, the Netherlands, Belgium, the United Kingdom, Israel, Italy, Portugal, Spain, Japan, Poland, Turkey, Mexico, Peru, Chile, Columbia, Sweden, Argentina, and Romania. The Wall Street Journal also announced that Groupon is preparing to launch deals in China.
4. Demand Media. This Santa Monica - based company isn't a social media company in the colloquial sense, but it does rely on principles of social media to operate. The company's sites specialize in static content while relying upon a social media platform of writers to get there.Â The company does include social media tools in its content that it distributes throughout the web. The company was founded in May 2006. On January 12, Demand Media said that they would price its IPO between $14 and $16 a share, with a total value of $1.3 Billion. In any case, some companies have questioned whether Demand Media will be profitable, as IPO filings have reported losses over the past few years.
So why should this information be significant for people who are interested in responsible business? Ultimately, it is important that we examine the biggest players in the field. What examples and precedents do these companies set? They are the first of their kind in their field-- what value do they bring to society, beyond big business? Do they deliver quality products that do in fact, pioneer innovations in this new industry?
Image Source: flickr.com/photos/thewalkingirony/3051500551