Matthew C Klein, Columnist

Guess Which Social Network Is Overpriced

Social networking companies are in a zero-sum competition for peopleâs attention. That suggests an limit on the market valuation of the sector as a whole.

November 22, 2013 at 3:59 PM UTC

By Matthew C Klein

Matthew C. Klein writes for Bloomberg View about the economy and financial markets. He previously wrote for the Economist magazine and its economics blog, Free Exchange. Before that, Klein was a research associate at the Council on Foreign Relations, where he spent more than two years studying the history of the Federal Reserve and the intellectual history of monetary economics for an upcoming book by Sebastian Mallaby. He also worked at Bridgewater Associates, where he studied the economies of Central and Eastern Europe and advised institutional investors on asset-liability management. Klein has a bachelor's degree in history from Yale University. Originally from Chicago, he lives in New York.

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Will boredom burst what looks like a bubble in social-media company valuations? It sure seems like it's possible.

As for whether there is a bubble, a new survey of Bloomberg subscribers found that 82 percent of traders, analysts and investors think there is. Here's the conundrum: Each company's valuation only makes sense if you assume that it will emerge as the dominant player. Of course, that's impossible.