I’m guessing there was a surprise surge in shorting social media stocks right before Fed Chairman Yellen said the obvious, that social media stock valuations are ludicrously high and unsustainable. This of course is Â a surge no one could have predicted (and which will barely be scrutinized by regulators, if at all.)
Nevertheless, valuation metrics in some sectors do appear substantially stretched—particularly those for smaller firms in the social media and biotechnology industries, despite a notable downturn in equity prices for such firms early in the year.
Facebook has a P/E of 87. LinkedIn and Twitter are losing money. These are the healthier companies. There are hundreds of little start-ups with insane valuations. Then there are the idiots who pledge $50,000 to help someone make potato salad. Of wait, these are probably the same people who buy flaky social media stocks.