Menu

Bubble in Theory, Not Reality

I read a somewhat interesting post on Reuters about LinkedIn’s recent IPO. In theory, LinkedIn’s first day price fluctuation and the week following the IPO, depicted a bubble. Three academics, Robert Jarrow, Younes Kchia, and Philip Protter, have created a model which they say proves their theory.

The paper they authored is currently being peer reviewed and will soon be released. What the paper essentially talks about is the volatility of “any other stock” compared to that of LinkedIn stock. The gut feeling out of the LinkedIn IPO compels one to say it is a bubble and the paper proves that point in theory.

I am still not convinced LinkedIn is a bubble stock and here’s why:

LinkedIn has a revenue generating service, can make a profit, is not “run-of-the-mill” startup that went to NYSE to cash in and above all, has an excellent management.

Of course there will be a price correction and the stock will close well under $40 by the end of this year, my speculation, but that doesn’t mean the company is fad. The paper in question does pose another interesting question that assumes that most social media companies to follow will create a dot com era bubble in the stock market.

Personally, I don’t think investors are that stupid. Memory of dot com bubble burst is still fresh in the valley. And yes startups are getting grossly insane evaluations, mostly undeserving, but it’s human nature to be part of the next big thing or bust. On the other hand, people who are trading the stock in the secondary markets are the ones who will lose if those startups fall flat, not the average investor.

Did I mention that Groupon filed for IPO?

How to Add Google +1 Button to your Blog using Sharebar Plugin

+1 Google’s +1 button is now LIVE and you can implement the code on your blog. Instead of just copy pasting the code on your blog, try achieving the functionality of the +1 button by adding the code to a social sharing plugin.

Install and activate Sharebar before you read any further.

Step 1

Assuming you have installed the plugin and activated it, go to Plugins menu and Click on Sharebar.

Step 2

There will be a blue colored button “Add new Button,” click that.

Step 3

Paste the code from Google +1 your Website. If you like what I have, use the tall code:

<!– Place this tag in your head or just before your close body tag –>
<script type=”text/javascript” src=”http://apis.google.com/js/plusone.js”></script>
<!– Place this tag where you want the +1 button to render –>
<g:plusone size=”tall”></g:plusone>

Step 4

Once you add the code, you should have a screen like this:

+1 Button

That’s all you need to do. Please let me know by commenting below if you run in to any problems implementing the +1 Button.

The Wall Machine – Fake Facebook Wall Generator

The Wall Machine - Fake Facebook Wall Generator Some wall posts are funny to begin with and authentic but what if you could create a fake Facebook wall and make it even funnier? You can do that with a new tool provided free by the “well intentioned” folks at The Wall Machine.

Connect using Facebook (duh) and you can pretend you are talking to someone you admire, hate or whatever. Make it funny (or not) and post it. You can see what others have posted to get an idea of how The Wall Machine really works. In case you are interested, my favorite fake wall post is “Bin Laden’s Last Status Update” and “God has a sense of humor.”

[ad#468]

Alternion – Your Social Media Dashboard

What if you could see all the status updates your friends post all over social media sites such as Facebook and Twitter in one place? What if you could manage 220+ social media accounts from one place? Well, look no further. Alternion is a free web service that let’s you manage all your social media services from one place. Not only social media, email as well, can be managed through Alternion.

Alternion is currently in BETA and you can request an invite. Turnaround for invitation is fairly quick and you will be able to access your social dashboard right after you sign up for the service using the invitation code.

CrunchBase Profile: alternion

Image Credit: CrunchBase

[ad#468]

Silicon Valley Recovery and Aftermath of LinkedIn IPO

19th May, 2011 was a big day for LinkedIn and why wouldn’t it be? It was first in line up of social media companies to go public. Not only did they have their IPO but I think they capitalized big time on the hype and the economics of supply and demand. LinkedIn has been around since 2003 and one can comfortably say that perseverance paid off big and the timing couldn’t be better. It’s time to celebrate if you are an early LinkedIn investor and/or employee with stock options. Do I hear “Paper Millionaire?”

I majored in Accounting and I can talk about LinkedIn’s crazy first day triple digit percentage gain in stock price and give you all kinds of numbers that will indicate a bubble but I am not going to do that. In fact, no one can be certain of LinkedIn’s worth. Though, I will say this one thing that has been in my mind since yesterday. If LinkedIn were a regular business that had its IPO or even sale, no one would be willing to pay $8 Billion for a company with 2010 revenue of $243 Million and profit of around $15 Million.

Just to give you some perspective, let’s just go back in time and look at another internet behemoth (at that time) 8 years in to the business since inception.

Yahoo! had revenues of $1.63 Billion in 2003, compare that to LinkedIn’s $243 Million. Yahoo! stock traded at $45.03 at the end of 2003, compare that to LinkedIn’s $93.09 close on 5/20/2011. You might say that I am not doing apple to apple comparison here but do you see why people like Jim Cramer think that it is insane? Revenues don’t match the high price people are willing to pay for LinkedIn stock. That’s mind boggling to many in the financial community.

Wait, there is a silver lining

I live in Santa Clara and couldn’t be more thrilled that LinkedIn is right in my backyard i.e. Mountain View. Those “paper millionaires” will soon cash in after the initial 6 month wait required by law. I wouldn’t say Silicon Valley has been a big casualty of the housing bubble but the home prices did go down and foreclosures remain high in some areas of San Jose. Mostly because of high unemployment and lack of new jobs. I am sure that majority of LinkedIn employees live in and around Mountain View and that means the local economy will see a recovery, if not outright growth. Even a blip will be welcomed at this point. That’s a good news no matter what your view is about LinkedIn IPO.

No one knows if Facebook is next or Zynga but we all agree that they are all in line and waiting for their “AHA” moment. Sometime this year? Maybe early next year?

Dude, what about the Bubble?

Give common sense benefit of the doubt. eBay, Amazon, Yahoo! were all the result of a bubble and they are still around. The strongest social media companies will survive and LinkedIn has a business plan unlike most of the early startups of the .com era. There is definitely hype but there is some truth to the hype too.

By the way

Are we connected on LinkedIn? If not, let’s connect. Use the email zhlilani[at]gmail.com to initiate connection.