Huffington Post

Beware the Facebook/Twitter/ Zynga/Pandora/HuffPo bubble!

February 15, 2011: 11:05 AM ET

The revelation that JPMorgan Chase is planning a dedicated fund to invest in social media companies on behalf of its wealthy clients is the loudest announcement yet that the third (fourth?) Internet bubble is in full swing.

TwitterEvery day, it seems, another Web company files papers for an initial public offering, and every day the chatter about possible valuations reaches new levels of absurdity. Because it's going to get pretty noisy around here soon, what with all the people trying to trample those in front of them in line to get their hands on some stock in tomorrow, I've put together a quick cheat-sheet for just how you might go about thinking about which companies you want a piece of. If, that is, you can even get your hands on them at all.

Companies that make a product that's fun to use, but have never earned a dime from me and probably never will.

Members: Facebook, Twitter, and Pandora.

Following its latest round of funding from Kleiner Perkins Caufield & Byers, Facebook's valuation is somewhere in the neighborhood of $52 billion, or north of 25 times revenues. Twitter comes in at $8 billion to $10 billion, or about 100 times revenues. And Pandora somewhere in the area of $1 billion or so, at a relatively modest 10 times revenues. More

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