The Next Tech Bubble...not So Fast !

By:


It seems that lately the media and financial world are all calling out for the next " Tech bubble". Fears of the 2000 dot-bomb collapse are gathering steam. The argument is that the recent increase in tech IPO's, their seemingly undervalued initial price and first day pops. Are signs that a 2000 style collapse could happen again. I don't think so.

The difference in this case, is that the IPO's they are worried about are nothing like they dot-bomb shell companies that cost so many, so much. Sure back then many people had terrific unrealized gains but they were just that unrealized. Not taking some profits, (if anything to recoup your initial investment) is just bad investing, not a bubble maker.

Zynga is one of the new ones that is being talked about. I see alot of big differences here. A social media game company, Zynga has the Mafiawars and Farmville games among others.

These games are cash flow generating machines. You can buy "reward points" that you use to improve your game. They did a cross promotion with 7-11 last year and also sell game cards to buy reward points there. Now just this week if you bought a $25 game card, you get a download of Lady Gaga's new album. These guys get it. Oh by the way did I mention the games are played on Facebook, and they accept Paypal?

My estimate of revenue from game card purchases alone could be 40 million a month from Mafiawars alone. That is based on the 17 million people that "like" the game, 8.5 million play actively, and if half of them only spend $10 a month....well you get the idea. That is possibly $480 million in game card sales annualy from just one game !!!

Another major positive to the earnings potential is the fact that the players are world wide. So if economic conditions are slow here, they can still generate revenue from other countries that may not be hurting as bad.

Can a real stinker of a stock run up to stupid valuations? Sure they can, but I think comparing Facebook, Zynga, Groupon to the dot-bombs is insane. These are real, functioning, and succesful private firms coming public. They are not riding the wave...they caused it !


About the Author:
Read more from the author here Topstockideas.com

Search for bonds and funds here Bondsandfunds.com



Article Originally Published On: http://www.articlesnatch.com


|

Loading...
Related....
Videos...

Recent Investing Articles

Comments

Still can't find what you are looking for? Search for it!

Loading

Copyright 2005-2011 ArticleSnatch, LLC - All Rights Reserved.
Privacy Policy | Terms of Service.