Close Menu
TechCentralTechCentral

    Subscribe to the newsletter

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    Facebook X (Twitter) YouTube LinkedIn
    WhatsApp Facebook X (Twitter) LinkedIn YouTube
    TechCentralTechCentral
    • News

      Takealot taps Mr D to deliver toys, pet food and future growth

      18 July 2025

      Cut electricity prices for data centres: Andile Ngcaba

      18 July 2025

      ‘Oh, Ani!’: Elon’s edgy bot stirs ethical storm

      18 July 2025

      Trump U-turn on Nvidia spurs talk of grand bargain with China

      18 July 2025

      Netflix premieres first AI-generated scene

      18 July 2025
    • World

      Grok 4 arrives with bold claims and fresh controversy

      10 July 2025

      Samsung’s bet on folding phones faces major test

      10 July 2025

      Bitcoin pushes higher into record territory

      10 July 2025

      OpenAI to launch web browser in direct challenge to Google Chrome

      10 July 2025

      Cupertino vs Brussels: Apple challenges Big Tech crackdown

      7 July 2025
    • In-depth

      The 1940s visionary who imagined the Information Age

      14 July 2025

      MultiChoice is working on a wholesale overhaul of DStv

      10 July 2025

      Siemens is battling Big Tech for AI supremacy in factories

      24 June 2025

      The algorithm will sing now: why musicians should be worried about AI

      20 June 2025

      Meta bets $72-billion on AI – and investors love it

      17 June 2025
    • TCS

      TCS+ | Samsung unveils significant new safety feature for Galaxy A-series phones

      16 July 2025

      TCS+ | MVNX on the opportunities in South Africa’s booming MVNO market

      11 July 2025

      TCS | Connecting Saffas – Renier Lombard on The Lekker Network

      7 July 2025

      TechCentral Nexus S0E4: Takealot’s big Post Office jobs plan

      4 July 2025

      TCS | Tech, townships and tenacity: Spar’s plan to win with Spar2U

      3 July 2025
    • Opinion

      A smarter approach to digital transformation in ICT distribution

      15 July 2025

      In defence of equity alternatives for BEE

      30 June 2025

      E-commerce in ICT distribution: enabler or disruptor?

      30 June 2025

      South Africa pioneered drone laws a decade ago – now it must catch up

      17 June 2025

      AI and the future of ICT distribution

      16 June 2025
    • Company Hubs
      • Africa Data Centres
      • AfriGIS
      • Altron Digital Business
      • Altron Document Solutions
      • Altron Group
      • Arctic Wolf
      • AvertITD
      • Braintree
      • CallMiner
      • CambriLearn
      • CYBER1 Solutions
      • Digicloud Africa
      • Digimune
      • Domains.co.za
      • ESET
      • Euphoria Telecom
      • Incredible Business
      • iONLINE
      • Iris Network Systems
      • LSD Open
      • NEC XON
      • Network Platforms
      • Next DLP
      • Ovations
      • Paracon
      • Paratus
      • Q-KON
      • SevenC
      • SkyWire
      • Solid8 Technologies
      • Telit Cinterion
      • Tenable
      • Vertiv
      • Videri Digital
      • Wipro
      • Workday
    • Sections
      • AI and machine learning
      • Banking
      • Broadcasting and Media
      • Cloud services
      • Contact centres and CX
      • Cryptocurrencies
      • Education and skills
      • Electronics and hardware
      • Energy and sustainability
      • Enterprise software
      • Fintech
      • Information security
      • Internet and connectivity
      • Internet of Things
      • Investment
      • IT services
      • Lifestyle
      • Motoring
      • Public sector
      • Retail and e-commerce
      • Science
      • SMEs and start-ups
      • Social media
      • Talent and leadership
      • Telecoms
    • Events
    • Advertise
    TechCentralTechCentral
    Home » Alistair Fairweather » Bubble? Ba-Zynga!

    Bubble? Ba-Zynga!

    By Alistair Fairweather3 September 2012
    Twitter LinkedIn Facebook WhatsApp Email Telegram Copy Link
    News Alerts
    WhatsApp
    Alistair Fairweather

    A year ago, the tech press was all aflutter about the possibility of a new bubble in the internet industry. The blogosphere hummed with dire predictions of “dot-bomb 2.0” and equally passionate rebuttals. It’s amazing how much can change in a year.

    The most high profile example is Facebook. After years of speculation and hype, the darling of the social networking world finally went public in May this year. The initial public offering (IPO) of Facebook’s shares raked in US$16bn of new capital for the company, making it the third largest IPO in US history. It set the company’s total market value at over $104bn (or nearly R1 trillion). Since then its share price been struggling. Currently it’s worth around $18/share — half its initial price.

    But Facebook is hardly the only one feeling the pain. Zynga, a wildly profitable maker of online games, made a big splash with its own IPO in December 2011. The offering raised $1bn from the markets and valued the company at $7bn. Its shares are now worth around $2,80 each — close to a quarter of the IPO price of $10 per share.

    The most painful example, though, is Groupon — an online “daily deals” service that went public in November 2011, raising $700m. At the time this made it the biggest technology IPO since Google, and valued the company at nearly $13bn. At its current share price the company is barely worth $2bn. Ouch.

    The only big Internet IPO in recent history that hasn’t ended in tears is LinkedIn — a social networking service for business people. Its shares are currently worth just over $107 — 15% more than its initial market price. But the road has hardly been smooth. LinkedIn’s shares have plunged below $65 on three separate occasions.

    Compared to Google — still the gold standard of the Internet IPO — all of these stories sound like abject failures. Google stock has never traded below its IPO price of $85 and its shares are currently worth over $685 each. What’s more, Google went public in 2004 when the wounds from the dot-com crash had barely healed. In the current climate its IPO would have been a feeding frenzy.

    But all of these supposed failures are actually good news. They tell us that the Internet has matured significantly as an industry, in part because investors understand a lot more about its capabilities and its limits. All of the companies listed above, including Google, have been punished by the markets for missing revenue or other targets. The main difference is that expectations of Google started out relatively low, and the company has consistently performed well above them.

    It’s tempting to write off the likes of Facebook and Zynga as overhyped and doomed, but to do so would be short-sighted. Both companies have hundreds of millions of users, many of whom pay them money directly, a previously unheard of phenomenon on the Internet. Both companies have some of the most talented people in the industry working for them, and both have huge competitive advantages over their rivals. Neither of them has spent much of the cash they earned from their IPOs.

    In fact, now might be a good time to invest in both of these companies. I would wait until mid-November to buy Facebook stock — since a large number of early shareholders currently “locked in” will be able to sell their shares then — but at that point the shares will probably be at around fair value. And Zynga, currently being punished for losing two high profile employees, is probably undervalued right now.

    And let’s not forget that none of these companies is even close to a decade old. The IPOs in question, however rocky, have made many of their founders into billionaires. Sure, Mark Zuckerberg, the 28-year-old founder of Facebook, is now worth “only” $10bn not $20bn. Do you think he really cares?  — (c) 2012 Mail & Guardian

    • Alistair Fairweather is GM of digital operations at the Mail & Guardian
    • Visit the Mail & Guardian Online, the smart news source


    Alistair Fairweather Facebook Google Groupon LinkedIn Mark Zuckerberg Zynga
    Subscribe to TechCentral Subscribe to TechCentral
    Share. Facebook Twitter LinkedIn WhatsApp Telegram Email Copy Link
    Previous ArticleTelkom launches 40Mbit/s DSL trials
    Next Article Pule appoints new Usaasa board

    Related Posts

    Larry Ellison, 80, is now world’s second richest person

    16 July 2025

    Meta to build Manhattan-scale, multi-gigawatt data centres

    15 July 2025

    Zuckerberg used open source to scale AI – now the lock-in begins

    14 July 2025
    Company News

    Vertiv to acquire custom rack solutions manufacturer

    18 July 2025

    SA businesses embrace gen AI – but strategy and skills are lagging

    17 July 2025

    Ransomware in South Africa: the human factor behind the growing crisis

    16 July 2025
    Opinion

    A smarter approach to digital transformation in ICT distribution

    15 July 2025

    In defence of equity alternatives for BEE

    30 June 2025

    E-commerce in ICT distribution: enabler or disruptor?

    30 June 2025

    Subscribe to Updates

    Get the best South African technology news and analysis delivered to your e-mail inbox every morning.

    © 2009 - 2025 NewsCentral Media

    Type above and press Enter to search. Press Esc to cancel.