That 90's Show

It appears that there’s a new bubble percolating among tech companies. This time, however, we’re not talking the tech start-ups whose bubble burst in the late ‘90s, with their lack of business plans and no prospect of profitability. What we’re seeing today are companies with something of a track record, but still provide a roller-coaster ride in terms of pricing fluctuations. Companies like Groupon, LinkedIn, even Facebook—which is valued at $75 billion. Yeah, that’s a “B”.

Not too long ago, Groupon turned down a $6 billion offer from Google. The reason: because Google’s culture was not conducive to the culture of Chicago-based Groupon. Recent reports reveal that Groupon believes its value to be between $15 and $20 billion, as it seeks to roll out its own initial public offering (“IPO”) soon.

Business oriented social media site, LinkedIn, rolled out its IPO last week at $45 per share, only to have the stock climb upwards of $122 per share before it came back down and closed around $90 per share by day’s end.

Russian search engine firm, Yandex, more than doubled its NASDAQ roll-out price of $24 by the end of the day.

Zynga, the social media gaming company is suspected of planning an IPO soon, hoping to raise $10 billion.

Real Estate website Zillow filed for an IPO last month, despite its relative unprofitability.

And Pandora, internet radio, filed for an IPO in February, hoping to raise $100 million.

It all seems to point to one conclusion: Tech Bubble 2.0

And one thing is certain, especially after Real Estate Bubble 1.0—which devastated the world-wide economy—Americans are tired of bubbles!

But some disagree. LinkedIn IPO is not a sign of a new tech bubble, according to Forbes writer Tom Taulli. Scott Olster of Fortune makes the case why Pandora’s IPO is not a sign of a bubble either.

While we are seeing some wild valuations, most of the recent IPO’s are for more substantial, sustained businesses than we saw in the ‘90s. It could be just coincidence that the companies recently seeking IPO’s are sustainable, potentially profitable enterprises. It’s difficult to tell at this point, though it looks like this will be a very interesting summer—the summer of the IPO. Are we seeing irrational exuberance again? Or are we witnessing a thaw in the once frozen capital formation markets?

In either case, a new surge in tech activity is bound to have a positive impact on the Pacific Northwest/West Coast real estate situation. The thing to keep in mind is that if this is indeed a new tech bubble, it may lead to a dramatic impact on real estate, which in turn could lead to another real estate bubble. Be wary, be wise.