Have we entered the age of the social media bubble? With valuations ranging from 90-270 billion, Facebook (NASDAQ:MSFT) shareholders would stand to make a windfall next year when the company makes its expected IPO. However, company insiders and financial experts may be starting to worry that Team Zuckerberg and Co. will not be able to churn out the revenue to keep pace with quickly inflating valuations. (Don’t Miss “Have No Fear: The New Media Bubble is Just Getting Started“)
According to Reuters some Facebook investors are looking to jump ship, having tried last week to sell about $1 billion worth of their holdings in the company. Analysts estimate that this sale would value the Internet’s largest social network at a price of 70 billion dollars or higher. These recent pangs of action have sent some investors, such as mutual-fund leader T. Rowe Price (NASDAQ:TROW), swooping down to snatch their piece of the company before the IPO.
However, other potential buyers seem less eager. Sumeet Jain partner at venture capital firm CMEA Capital, spoke reluctantly of grabbing a stake in the company, saying of Facebook, “At the current valuation where it is, it is really hard to justify the investment.”