Social Stocks Tumble, Profitless IPOs -- Signs of a Bubble?

Could this be a bubble for fast-growing Internet tech stocks like Facebook (NASDAQ: FB  ) , LinkedIn, and Twitter? There are several signs that it could. For one, an outsized sell-off on Monday for these stocks compared to the overall market suggested the market may be reevaluating the rosy expectations priced into these companies' lofty valuations. Second, a recent filing from cloud storage company Box to go public despite the fact it's losing more money than it's taking in and it doesn't expect to reach profit levels in the foreseeable future.

In the video below, Fool contributor Daniel Sparks takes a closer look at this potential tech bubble. Pointing to Facebook as an example, he acknowledges that some of these growth stocks do deserve premium valuations since they are growing their underlying businesses by leaps and bounds. But has the extent of valuations on these fast-growing Internet growth stocked reached dangerous territory?

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  • Report this Comment On March 26, 2014, at 3:01 PM, Risky88 wrote:

    You can't define the definition of a bubble before you speak, you can't call it a bubble.

  • Report this Comment On March 26, 2014, at 4:55 PM, TMFDanielSparks wrote:

    Bubble: a group over overvalued assets. In this case the group of assets would be fast-growing Internet stocks.

  • Report this Comment On March 26, 2014, at 10:36 PM, somethingnew wrote:

    If profitless IPOs are a sign of a tech bubble, then we've been in tech bubble for the past 3 years. ;) Seriously, I don't know if we're in a bubble or not but the market has been flooded with mostly garbage IPOs since 2011 with the exception of a handful of stocks. I find this interesting because usually when you see the beginning of a boost in vc spending it seems like the first Ipos are usually the higher quality stocks followed gradually by the crappier ones as the vc market gets more over heated. In this case though there seems to have been a pretty steady flow of crap stocks flowing through the Ipo process for years intermixed with the occasional quality company like LinkedIn or Facebook since the tech IPOs really started to take off in 2010.

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