The social media bubble is a hypothesis stating that there was a speculative boom and bust phenomenon in the field of social media in the 2010s, particularly in the United States. The Wall Street Journal defined a bubble as stocks "priced above a level that can be justified by economic fundamentals,"[1] but this bubble includes social media. Social networking services (SNS) have seen huge growth since 2006, but some investors believed around 2014-2015, that the "bubble" was similar to the dot-com bubble of the late 1990s and early 2000s.
In 2015, Mark Cuban, owner of the Dallas Mavericks NBA team and star of the TV show, Shark Tank, sounded an alarm on his personal blog over the social media bubble, calling it worse than the tech bubble in 2000 due to the lack of liquidity in social media stocks.[2] A year prior, however, Cuban told CNBC that he did not believe social media stocks were on the verge of a bubble.[3] In a letter to investors in 2014, David Einhorn, who runs the hedge-fund Greenlight Capital, wrote that "we are witnessing our second tech bubble in 15 years."[4] He went on to write, "What is uncertain is how much further the bubble can expand, and what might pop it." Einhorn cited several factors supporting the existence an over-exuberance including "rejection of conventional valuation methods" and "huge first day IPO pops for companies that have done little more than use the right buzzwords and attract the right venture capital."[4]
Since those claims, services like Facebook, Twitter, Instagram, and Snapchat have grown to become multi-billion-dollar corporations generating enormous revenues,[5] though some continue to lose money.[6]