Need More Proof?
Social media is riding high on the wave of investor interest. But will that ride continue or will it lead to a crash and burn?
There may be evidence for what is coming in the actions of employees and early investors who have taken advantage of the rising stock price and cashed in to collect their earnings. This does not bode well for these companies as it seems to say their own employees are not optimistic about the future.
What does the future hold for social media?
Clearly interest remains strong among the people who sue it. Social media use continues to grow and sites like LinkedIn and Facebook are posting record revenues.
There is no doubt in my mind that social media is the new reality. The only question is whether or not there is room for all the different social media sites that exist today. There is also some question how companies like Twitter will earn any revenue at all.
Don’t doubt the impact social media can have on your bottom line, but don’t be too quick to invest in companies that have not yet proven their worth.
With valuations for social media companies like Facebook, LinkedIn and Twitter soaring on the secondary markets, it’s hard to blame the earliest employees for selling some of their stock. They want to unload some of their riches just in case (before?) the bottom falls out like it did in that last great Internet age. It’s not always easy, but it is possible. Facebook has even gone so far as to help facilitate the sale of early shares at an institutional level, transferring shares held by those inside the office to private investors on the outside.
This new infographic from Focus looks at how employees at the social media giants are cashing out and, more importantly, how their actions could be affecting the valuations of the companies they work for.
Infographics are always a bit of a hodgepodge of statistics culled from a variety of sources. Here, we sort through the clutter and pull out some of our favorite facts and figures:
Interest in selling social media stock (34 percent in the second quarter of 2011) has far outstripped interest in selling stock in retail and commerce (6.1 percent), gaming (1.6 percent) and software (7.7 percent). The industry demand for these stocks is equally high as many social media employees sell what stocks they can.
From the last quarter of 2010 to the first quarter of 2011 there was a 22 percent increase in completed transactions by ex-employees. At the same time, there was a 24 percent decrease in completed transactions by current employees.
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