The social-media explosion: Boom or bubble?

Facebook's value is skyrocketing, says Lauren Bloom in TheStreet. But is this just a replay of the '90s dot-com gold rush, which ended in much crashing and burning?

Facebook, now valued at $50 billion, has moved past Yahoo! and eBay and is gaining on behemoths like Disney ($70 billion).
(Image credit: Corbis)

The "sudden, meteoric explosion in the value of social media sites like Facebook and Twitter" has inspired awe, says Lauren Bloom in TheStreet.com. But it's "eerily reminiscent of the rise, about 15 years ago, of the online businesses that created the 'dot-com bubble.'" After the first online gold rush, some companies — such as Amazon — became honest-to-goodness money-makers. "But far too many — GeoCities, Freeinternet.com, theGlobe.com, and others — quickly lost value when it became apparent that their rapid growth wasn't yielding revenue." Goldman Sachs' recent investment in Facebook valued it at $50 billion, making it worth more than Yahoo, eBay, and Time Warner. Facebook is even gaining on Disney, which is worth $70 billion. But, notes Bloom, Disney investors are buying into "real assets" — parks, cruise ships, a "massive library of classic animated films." What exactly do you get when you buy a piece of Facebook? Here, an excerpt:

So, how much is Facebook's network of users really worth? The potential is clear — when so many people are gathered in one (virtual) place, offering so much personal information about themselves, they create an unprecedented platform for targeted advertising....

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