I may not know much about social media, but I’m fairly certain this is spot on!
For the past several decades, the stock market and the financial world seem to be increasingly abstracted from “the real world.” The epic housing bubble and economic downfall of the 2000’s are just a few obvious manifestations of this phenomenon. My rough understanding of how any valuation should work is based on my experience of everyday consumerism, paying for basic products whose cost is based roughly on the cost of production and a bit of added expense for the psychological value of an object based on brand and commercial image.
Obviously, the wild world of valuation on the stock market is a much different kind of enterprise. I was struck by this anew when considering Twitter’s IPO last week, and how this flurry of financial activity relates to our understanding or lack thereof about the “value” of social media.
I first became curious when I read that Twitter stock prices…
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