Social Media Over-The-Top Valuations: Tech Bubble Infographic

Here at OSM one of the subjects we write most about is social media and we also enjoy a good infographic. Recent examples where these combined have included Facebook profile photo statistics and another infographic about social asks. Today’s news though looks at whether there is a tech bubble surrounding social media sites, following recent over-the-top valuations.

We’ve told recently of the Microsoft purchase of Skype for $8.5 billion and also informed readers how LinkedIn reached a valuation of $8.9 billion after its first day trading as a public company and it seems that investors are increasingly buying users rather than revenue. This interesting infographic was brought to us from Charlie White over on Mashable, and created by G+, a social media site. You can see the infographic next or see here for full-size.

As you can see the infographic looks at several social media companies, Skype, Delicious, Facebook, Groupon, LinkedIn and Color and Twitter. It shows a timeline from the company being founded to recent valuations for each site. This points to a tech bubble being created by companies being over-valued, way above their revenue. For example if we look at just one of these companies, Facebook, we can see that the company was founded in 2004 and follow a timeline right through to the present day where we can see that annual revenue reached $2 billion, although the company was recently valued at $75 billion. This creates a bubble of 37.5x revenue.

What’s more the forecast is that an IPO in 2012 will see Facebook valued at $100 billion, that’s approximately 50x yearly earnings. We’d be interested to hear your thoughts on this. Do you think from the figures given that these companies are vastly over-valued and hence another online tech bubble is on the cards? Let us know with your comments.