Time to Get Another Bubble Started?

On Thursday of last week we commented briefly on the announcement that Groupon has filed for an IPO.  It has not taken long for folks to start asking the bubble question.  We’re glad they are – between the first tech bubble, the housing bubble, the possible education bubble and other smaller bubbles in between (commodities, etc.) the US economy seems to be a little too bubble driven for our liking.

Chunka Mui over at Forbes.com sees Groupon Hysteria.  His argument is that the IPO only makes sense if you look at it the context of a bubble:

The simple rule about market bubbles is to get in and out before they pop, and by that standard the news that Groupon is moving towards an IPO makes all the sense in the world. The same is true for Facebook, Twitter, Zynga, and the other social media darlings of the moment, as well as for the lesser known companies that are talking to bankers at this moment in hopes of sharing in the frothy “comparable” price umbrella that is forming.

and, like all bubbles, this one is accompanied by the argument that the irrational pricing is, indeed, rational:

Fueling the rationalization for the current exuberance, as opposed to the last tech bubble’s irrational exuberance, is the argument that, this time, it is different. Investors are buying into real profits and sustainable business models, the argument goes, rather than investing in just eyeballs and greater share in markets with as-yet-to-be-defined revenue models. Microsoft’s $8.5 billion acquisition of Skype and, now, Groupon’s IPO filing should give pause to those who might accept this line of reasoning.

Anupreet Das and Geoffrey A. Fowler at the Wall Street Journal are no less concerned, reporting Groupon to Gauge Limits of IPO Mania:

Groupon’s filing comes on the heels of LinkedIn Corp.’s successful IPO, the latest sign of surging valuations for companies connected with hot Internet trends. The size of Groupon’s losses may add fuel to the arguments that investors’ appetite for high-profile tech offerings is becoming overheated, as it did before the first Internet stock-market bubble burst in 2000.
For more, Allison Linn at MSNBC explores various opinions of whether we’re in a bubble or not in Groupon IPO has some wondering about a bubble.

Groupon Hysteria | Forbes
Groupon to Gauge Limits of IPO Mania | Wall Street Journal
Groupon IPO has some wondering about a bubble | MSNBC
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1 Response to “Time to Get Another Bubble Started?”

  1. Groupon IPO: 31 arguments for and against getting involved

    […] Time to get another bubble started? […]