Thursday, June 9, 2011

Groupon, LinkedIn and the Stock Market Bubble

Ted Kavadas submits:

On March 1, I wrote a post entitled "The Stock Market Bubble - Various Aspects," where I highlighted a variety of factors that support my conclusion that the entire stock market is experiencing a bubble. One of the factors listed was "Extremely rapid valuation increases seen in a variety of private (tech) companies to high valuations, despite any clear indication that fundamentals have changed proportionately."

Since the writing of that post, we have had one very notable IPO, LinkedIn (LNKD), as well as another pending IPO, Groupon (GRPN), that serve to illustrate that point. Notable about many of the private tech companies' valuations are the current size of the valuations; the size of the valuation increases; and the rates at which the valuations are increasing. All three of these aspects are (very much) outsized.

LinkedIn's first day of trading, May 19, likely reminded some of the type of manic price

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