Social Media Bubble Pops Before It Fully Inflates 200
bdking writes "Groupon's IPO plans are melting down. Facebook has pushed back its IPO to next September. And now Zynga reports a 95% reduction in sequential quarterly profits. So much for the social media IPO bubble."
At least everyone is getting let down before a lot of people lose a lot of money this time around.
Re:Group = Social Media? (Score:2, Informative)
This. There's no real "social" aspect to Groupon's core business. It's a company that sells discount gift certificates, that's all there is to it.
Re:given the state of the economy, (Score:5, Informative)
From what I've read, Zynga's revenues rose 115%, but profits dropped 90%+.
http://latimesblogs.latimes.com/entertainmentnewsbuzz/2011/09/zyngas-90-drop-in-second-quarter-profits-unlikely-to-derail-ipo.html [latimes.com]
According to that article, their costs went up a ton due to development of two new games that have yet to make them money. I have a hard time swallowing the article's claim that a 90% drop in profits isn't something to be alarmed about.
Re:Overly dramatic headline (Score:5, Informative)
Social media = relationships between users (Score:3, Informative)
The definition of "social media" varies but generally speaking the word implies online service that is centered around the social relations between the users. Social media builds on who you're interested in, not on what you're interested in. It's based more on the amount of communication as opposed to the content of communication.
For example, Slashdot isn't social media because I come here for the content (articles and the information and opinions found in comments section). Facebook is social media because I go there to see what people I'm interested in are up to - the content of our status updates and comments hold no value at all but rather the fact that we communicate and the metadata of the communication (tones, etc.) are what matters. Some services (Messageboards, IRC, etc.) CAN be used for communication that contains useful information and they CAN be used just for building and maintaining social relations. Generally, a service isn't labeled "social media" unless it is in some ways been clearly designed for that purpose (FB is clearly built for that purpose, IRC can be used in somewhat similar ways but hasn't been specifically designed around that).
Groupon does have some aspects that could technically be called "social" but they're not what the word meand in "social media".
90% - really? (Score:4, Informative)
For the six months ended June 30, 2010 and 2011, our revenue increased from $231.0 million to $522.0 million, our bookings increased from $373.0 million to $561.3 million, our net income decreased from $20.4 million to $18.1 million and our adjusted EBITDA decreased from $187.3 million to $177.3 million.
It looks like net income dropped 10% (to 90% of what it was), and EBITDA dropped by about 5%.
How that translates to a 90% loss in profits I'm not quite sure... Seems like it's a drop TO 90% of what it's profits were - a 10% reduction, not a 90% reduction.
Re:Group = Social Media? (Score:3, Informative)
Doesn't it have a feature where if you buy something and then get some number of friends to buy it you get it for free?
Another spin on multi-level marketing, AKA a form of ponzi scheme...
Actually just a general pyramid scheme. Ponzi schemes may be famous right now, but not all investment frauds are ponzi schemes.
In a pyramid scheme, each new investor has to get new investors for himself to create value to his own investment. A club that costs $30 to join where each member gets $10 for each person they invite is a pyramid scheme.
In a ponzi scheme each new investor adds value to all the previous investors; consequently, fewer investors are needed. That's one reason ponzi schemes are so much harder to find. An investment firm that pays older investors with the money earned from newer investors, rather than from external investment into something like stock, is a ponzi scheme.