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The social media bubble popped, but the sky isn’t falling

August 17, 2012 | Online Marketing

Facebook's stock offering and the collapse of Groupon's and Zynga's share prices make it clear that the air has gone out of the social media bubble. But rather than abandoning social media, investors and brands are simply getting a bit more realistic and pragmatic about their social media approach.

There's no doubt as to when the dot-com bubble popped: it was on March 10, 2000, the day the Nasdaq peaked at 5,132.52. But when exactly did the social media bubble pop? Was it Nov. 23, when Groupon shares fell below their $20 IPO price or this week, when they neared $5? Was it May 18, the day of Facebook's IPO fiasco? Was it even more recently, when Facebook shares dipped below $20 for the first time or the day Zynga's began trading at less than $3 each, a whopping 70% below their offering price? Hard to say. But pop, it did.

How quickly things have changed. It was just a year ago that Silicon Valley was gripped by an are-we-or-are-we-not in a bubble debate. Many of the Valley's brightest lights took the latter position, rejecting out of hand the notion that a bubble was at hand. These were all real companies, they insisted, with soaring revenue and healthy profits. There were no Pets.coms or Webvans this time around. Perhaps. But now, with Groupon, Facebook and Zynga alone accounting for tens of billions in losses to investors, it's a different story.

Of course, even bloodied, none of these companies is going out of business. Social media is hardly dead. What's dead is the world's wild infatuation with all things social. That change alone could have profound implications.

Get the full story at Fortune

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