Dealbook's Evelyn M. Rusli reports that the music-sharing company Spotify is raising money as part of a deal that values it at $4 billion, and fresh off this morning's enormous $1.5 billion valuation for Pinterest, we can't help but fear this is more evidence of a social media bubble. Of course, we're less than 24 hours away from the biggest social media valuation of all time: Facebook's IPO.
This report confirms rumors that Spotify was positioning itself to investors with that eye-popping valuation, so today's news isn't entirely unexpected. But Dealbook's Rusli notes that the number marks an amazing rise for a company that only debuted in the U.S. a year ago. Spotify, unlike the billion dollar Instagram, at least already has a hefty revenue stream. Nevertheless, it's currently losing money as it invests in its business. As we recalled after news of Pinterest's valuation this morning, bubbles happen, according to The New York Times, when "mania causes the price of an asset to soar far above its intrinsic worth." With another enormous social media company grabbing our attention with its sky-high valuation, it might yet again be time to brace ourselves for bursting of the social media bubble.
This article is from the archive of our partner The Wire.
We want to hear what you think about this article. Submit a letter to the editor or write to firstname.lastname@example.org.