Social Networks - a Bubble but Just Getting Started

Facebook's acquisition of Instagram has raised a few eyebrows but also has plenty of VC's and entrepreneur-wannabes salivating. If a 2-year old company with 13 employees and no revenue can be worth a billion dollars, well then the sky is the limit! As long as you are in the right space.

Since any of the staid cashflow or income-based models do not apply to this amazing growth sector, we need a brand new way of valuing such companies. One way people are looking at the recent acquisition

At Least One Seller Cashing Out on Facebook Before the IPO

The forthcoming Facebook IPO has been all the hype - and large amounts of it. Most of the pundits have been negative, citing overblown Price/Sales ratio and a shift in user base from developed to developing countries. Since the sentiment is quite negative, the IPO would probably do OK at least at first. The Nasdaq closing at an 11-year high on Friday certainly indicates strong investor demand for tech stocks and the social network space has a scarcity of liquid public stocks as a vehicle for betting on the future of the sector.

There are signs that the hype may be too much. According to Reuters, a woman in Wisconsin was arrested