As you’ve probably heard AOL today announced the acquisition of social networking site Bebo for $850 million.
Sure, we could discuss how this will help AOL turn AIM and ICQ into an uber-social network. We could also discuss how Yahoo and Google let this slip from their grasp. But, here’s the question I’d like to ask…
Does this prove that social networks are approaching their own “bubble?”
For the past year, we’ve heard rumors that Bebo is up for sale. Valuations have typically placed the social network in the $1 billion to $1.5 billion price range. Now, after weeks of speculation that internet users are tiring of social networks, Bebo sells for just $850 million–almost half the top-end valuation thrown around last year.
Here’s what I think. The rise (and demise) of social network valuations will be bookended by two deals. News Corp’s bargain buy of MySpace for $580 million–which is now worth considerably more–and AOL’s purchase of Bebo for $850 million–which appears to be considerably less than previous valuations.
Is this a bubble? Will the popularity of social networks burst? I guess, all eyes are now on Facebook to see if its next deal keeps its valuation close to the $15 billion from October 2007.