These are impressive figures that inevitably lead us to consider the distorted perception of the value of the companies involved in the Internet economy (for the sake of comparison, the cost of a Shuttle mission is usually around $450 million).
Internet companies like Facebook and Twitter are nothing more than information sharing platforms. They do not provide value added services nor provide products that create wealth directly. So far, the main indicator of their monetary value is the number of users and their geographical distribution on the globe.
It is realistic to expect that the growth rate of the most popular social networks will see a substantial braking within the next two years, reaching a “physiological” saturation. Their population will tend to settle around a limit value and, in the absence of any other significant lever, reduced growth in terms of users will be perceived by investors as a factor of recession.
Facebook, Twitter and generally any Internet company survive mainly through a business model based on advertising revenues. It always works but it is also extremely weak when the market falters. The Internet companies don’t have levers (such as launching a new product) to influence the market, but they passively suffer from periodic cycles of booms and halts. Often they are climbing fast only to fall violently.
From what we see in the figures it feels like we are experiencing the same mass hysteria that characterized the boom of the Internet companies of the late nineties. Soon thereafter the bubble of the dot com economy exploded with a deafening roar.
Apparently, history does not teach us anything.
Source from : Woork Up
No comments:
Post a Comment