Are we seeing the beginning of Dotcom 2.0, as some of social media networking sites which are clearly the industry’s most successful properties prepare for their intial sales of public stock?
Twitter and Groupon, both expected to go to market in the coming months, should not count on any support from the all-time champion of value investments, Warren Buffet, Chairman and CEO of Nebraska-based, Berkshire Hathaway Inc.
On March 25, the so-called, “The Sage of Omaha” reportedly told an audience in New Delhi, India, that most social networking websites “will be overpriced” when they come to market, according to Bloomberg. “
”It is extremely difficult to value social-networking sites, he added, without naming names. “Some will be huge winners, which will make up for the rest.” Just don’t look to Buffet for clues as to which ones will be the winners. He definetlu doesn’t sound interested.
Its clear that Facebook Inc., with private investments (including from Goldman Sachs) that have the company valued at around $50 billion for an IPO is the darling of the class. While the much smaller, but soaring in popularity, Twitter Inc., initially valued at $3.7 billion, but revalued to $5 billion after receiving significant funding from venture capital firm Kleoner Perkins Caufiled & Byers, is bound to be a highly sought after property as well.
That leaves Groupon Inc. as the “wild card” in the deck. Late last year the company famously walked away from a $6 billion dollar takeover bid from Google. Now rumors are talking about an IPO in the range of $25 billion, and its likely hard to valuate the longevity of its market share in providing local online coupons, or the depth of the market share as other companies, including Google get into the local couponing market.
If any of these big three social media darlings walks like a duck, and quacks like a duck it is Groupon. For Facebook and Twitter the IPO market looks like clear sailing. Just don’t expect a tailwind blowing in from Nebraska.