Could Facebook’s IPO be unveiling a new tech bubble?

Scott Tong May 22, 2012
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Could Facebook’s IPO be unveiling a new tech bubble?

Scott Tong May 22, 2012
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David Brancaccio: Will Facebook’s IPO hangover continue today? The stock tanked 11 percent yesterday, and a technology glitch marred its first day of trading Friday. Some look at the disappointing debut and wonder if something’s amiss generally in the tech sector.

Marketplace’s Scott Tong reports.


Scott Tong: Don’t look now, but it’s not just Facebook that investors have de-friended. Zynga — maker of the videogame Farmville — saw its stock dig 25 percent underground since it went public. And then there’s Groupon.

Northwestern University business professor Anup Srivastava says there’s a tech stock bubble that’s deflating.

Anup Srivastava: We haven’t seen the whole cycle yet. Remember Groupon? Groupon lost 70 percent in first year of trading.

He sees hysteria around Facebook, and thinks the market’s overvalued the company. Of course the losers here are not company founders, who cashed in when they went public.
 
It’s you and me, says Roger Kay of Endpoint Technologies.

Roger Kay: All the public invetors who came in and bought stock on the first day at $38, and it’s now at $33 are basically in the red. They’re losing money but that’s Joe Public.

Still, even tech bears acknowledge time will tell if they’re right. So watch Zynga, Facebook, Groupon and Twitter, the so-called “Four Horsemen” of the Internet.
 
I’m Scott Tong for Marketplace.

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