more bubble talk

I already talked about this in July. But, it’s starting to get worse…Price Targets. I haven’t heard this term since I read dot con in b-school. Now we have an anticipation of Google hitting $600/share soon from TheStreet.com and we have people claiming that it will eventually reach $2000/share (ridicuolous). Price targets are, essentially, lame. They create an image (see Netscape circa 1994) of a company with significant value that in reality does not exist when you break down the numbers. To me it’s a marketing campaign for stock brokers. As they are seeing increasing shifts to online commerce and services they tend to overvalue a company now when they may revolutionize the industry next year. But VC’s are fueling the overvaluation of pre-IPO stocks which in turn gives stock analysts apparent justification on doing the same thing.

The stage of the pre-IPO hype (see Google 18 months ago) is being set once again. Google is the new Netscape of the 1990’s. Netscape fueled the round one, Google will fuel round two. My prediction for 2006(I know, it’s late) is that VC’s push the development of this phase into production this year. I see this especially as GYM become the latest crop of venture capitilists. Now real VC’s will have to clamor to make money when they lose out on the possiblity of taking del.icio.us public. I know that sounds ridiculous, but did it not sound ridiculous to take an online grocery service public in the first dotcom boom?

VC’s fuel overvaluated web service companies (my web 2.0 definition: web service company that brings about the next internet bubble [joke]) to IPO’s. The stock gets overvalued by market analysts. Bubble bursts, history repeats itself. At least I hope I get in on it this time.

Techdirt is all over it.

Technorati Tags: business | web | tech | internet

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