Social media bubble

From HandWiki - Reading time: 5 min

The social media bubble is a hypothesis stating that there was a speculative boom and bust phenomenon in the field of social media in the 2010s, particularly in the United States. The Wall Street Journal defined a bubble as stocks "priced above a level that can be justified by economic fundamentals,"[1] but this bubble includes social media. Social networking services (SNS) have seen huge growth since 2006, but some investors believed around 2014-2015 that the "bubble" was similar to the dot-com bubble of the late 1990s and early 2000s.

In 2015, Mark Cuban, owner of the Dallas Mavericks NBA team and star of the TV show, Shark Tank, sounded an alarm on his personal blog over the social media bubble, calling it worse than the tech bubble in 2000 due to the lack of liquidity in social media stocks.[2] A year prior, however, Cuban told CNBC that he did not believe social media stocks were on the verge of a bubble.[3] In a letter to investors in 2014, David Einhorn, who runs the hedge-fund Greenlight Capital, wrote that "we are witnessing our second tech bubble in 15 years."[4] He went on to write, "What is uncertain is how much further the bubble can expand, and what might pop it." Einhorn cited several factors supporting the existence an over-exuberance including "rejection of conventional valuation methods" and "huge first day IPO pops for companies that have done little more than use the right buzzwords and attract the right venture capital."[4]

Since those claims, services like Facebook, Twitter, Instagram, and Snapchat have grown to become multi-billion-dollar corporations generating enormous revenues,[5] though some continue to lose money.[6]

History of Social Networking Services

Social networking services have grown and evolved with time since the launch of SixDegrees.com in 1997.[7] Cutting edge at its time, SixDegrees.com allowed users to create a profile, invite friends, and connect within its platform. At its peak, SixDegrees.com had more than 3.5 million users. Between 1997 and 2001 more social sites aimed at allowing users to connect with others for personal, professional, or dating reasons.[8]

Friendster and MySpace were next to enter the social SNS arena, followed by Facebook in 2004. Even though MySpace had a following of more than 300 million users, it could not compete with Facebook, which now has overtaken the social networking world. However, as development of SNS started to emerge, a market saturation began to take effect.[9]

Some classrooms have begun to incorporate technology in daily learning as well as social channels specific to student's course work. Traditional social media sites are used, as are educational oriented sites such as ShowMe and Educreations Interactive Whiteboard.[10]

Launch Dates of Major Social Networking Sites Website
1997 SixDegrees.com
1999 LiveJournal · AsianAvenue · Black Planet
2000 LunarStorm · MiGente
2001 Cyworld · Ryze
2002 Fotolog · Friendster · Skyblog
2003 LinkedIn · MySpace · Tribe.net · Open BC/XING · Last.FM · Hi5
2004 CouchSurfing · Orkut · Dogster · Flickr · Piczo · Mixi · Facebook (Harvard-only) · Multiply · aSmallWorld · Dodgeball · Care2 · Catster · Hyves
2005 Yahoo 360 · YouTube · Xanga · Cyworld · Bebo · Facebook (High School Networks) · Ning · AsianAvenue (relaunch)· BlackPlanet (relaunch)
2006 QQ (relaunch) · Facebook (corporate network) · Windows Live Spaces · Cyworld (U.S.) · Twitter · Facebook(everyone)

Controversies

While SNS continue to play an influential role in helping people form real-world connections via the Internet, renewed concerns over the social media bubble have surfaced due to recent controversies. These threats include growing concerns about breeches in data, the rise of bot accounts, and the sharing of fake news on SNS platforms. There are also concerns that big data figures associated with these SNS are inflated or fake,[11] as well as worries about the role the platforms played in national elections (see Russian interference in the 2016 United States elections). These issues have resulted in a lack of trust among the sites' users.[12]

See also

References

  1. Hanke, Steve. "Wall Street Correction, Yes -- Bubble, No" (in en). https://www.forbes.com/sites/stevehanke/2018/02/05/wall-street-correction-yes-bubble-no/. 
  2. "Why This Tech Bubble is Worse Than the Tech Bubble of 2000 | blog maverick" (in en). http://blogmaverick.com/2015/03/04/why-this-tech-bubble-is-worse-than-the-tech-bubble-of-2000/. 
  3. Belvedere, Matthew J. (2014-07-25). "I don't see bubble in social media stocks: Cuban". https://www.cnbc.com/2014/07/25/i-dont-see-bubble-in-social-media-stocks-cuban.html. 
  4. 4.0 4.1 Roche, Julia La. "DAVID EINHORN: 'We Are Witnessing Our Second Tech Bubble In 15 Years'". https://www.businessinsider.com/einhorn-sees-tech-bubble-2014-4. 
  5. Kinahan, J. J.. "Twitter And Facebook: Social Media Takes The Earnings Stage" (in en). https://www.forbes.com/sites/jjkinahan/2019/04/22/twitter-and-facebook-social-media-takes-the-earnings-stage/. 
  6. Green, Timothy (2019-02-06). "Snap Is Still Losing a Ton of Money -" (in en). https://www.fool.com/investing/2019/02/06/snap-is-still-losing-a-ton-of-money.aspx. 
  7. "Then and now: a history of social networking sites" (in en). https://www.cbsnews.com/pictures/then-and-now-a-history-of-social-networking-sites/. 
  8. Boyd, Danah M; Ellison, Nicole B. (2007). "Social Network Sites: Definition, History, and Scholarship" (in en). Journal of Computer-Mediated Communication 13 (1): 210–230. doi:10.1111/j.1083-6101.2007.00393.x. ISSN 1083-6101. 
  9. Ellison, Nicole B.; Boyd, Danah M (2007-10-01). "Social Network Sites: Definition, History, and Scholarship" (in en). Journal of Computer-Mediated Communication 13 (1): 210–230. doi:10.1111/j.1083-6101.2007.00393.x. 
  10. Miller, Gary J. (2018-10-02). "Technologies in the Classroom: Advancing English Language Acquisition". Kappa Delta Pi Record 54 (4): 176–181. doi:10.1080/00228958.2018.1515546. ISSN 0022-8958. 
  11. "Bursting of the social-media bubble". https://junkcharts.typepad.com/numbersruleyourworld/2018/02/bursting-of-the-social-media-bubble.html. 
  12. Arnold, Andrew. "Consumer Trust In Social Media Is Declining: Here's How Brands Should Change Their Strategies" (in en). https://www.forbes.com/sites/andrewarnold/2018/07/29/consumer-trust-in-social-media-is-declining-heres-how-brands-should-change-their-strategies/. 






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