Why This Tech Bubble Is Different From the Last, For Now.

I believe, like many others, that this is a bubble, just look at all the signs that point to why it is (booming IPOs both in number and performance). However, assuming every bubble is different, there are a few factors worth noting that makes this time around different from the last, hopefully for the better.

One is that this bubble hasn’t really affected the price of other technology companies yet. We saw that in 2000 when the tech IPO happened, every tech stock soared high. This time, people are way more careful: Technology Stocks Cheapest Since 1998 as LinkedIn IPO Spurs Bubble Worries (Bloomberg).

Also, in 2000, it was acceptable not to have a real business model. You could say “we’ll make money.” This time around, the companies that are doing IPOs have a proven business model. It’s still concerning that they’re simply saying “we’ll make more money”, but it’s a lot better than “we’ll figure out how to make money.” Especially because almost every web business in 2000 had ads as their business model, this time around, even ad based revenue models are much more sophisticated.

We’ll see how this turns out. Nonetheless, I think most of us can agree that it’s a good time to get in on these IPOs in the short run, but that in the long run, you should be very weary.

Photo from Flickr. Thanks Silly_a1804!






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