Ephemeral returns: Social network valuations and perceived privacy

Browne, Oliver; O'Reilly, Philip; Hutchinson, Mark

Ephemeral returns: Social network valuations and perceived privacy

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Ephemeral_Returns__Social_Network_Valuations_and_Perceived_Privac.pdf(271.04 KB)

Published Version

Date

2017

Authors

Browne, Oliver

O'Reilly, Philip

Hutchinson, Mark

Publisher

Association for Information Systems (AIS)

Abstract

This paper investigates the valuations of social media platforms (SMPs) in light of the recent initial public offering (IPO) of Snapchat. Innovative platforms with unproven business models and non-voting shares commanding relatively high valuations at IPO stage as well as a shift in investor profile towards personal rather than institutional investors have eerie connotations with the tech bubble of 2000. We posit that investors value a passive audience for SMPs rather than an active user community and apply potentially unrealistic customer lifetime values and expected user growth in a highly competitive market. We also posit that investors overestimate willingness to participate, the potential success in the adoption of paid services and do not account fully for perceived or real privacy features.

Keywords

Initial public offering , Firm valuation , Willingness to participate , Privacy , Information privacy , Community engagement

Citation

Browne, O., O'Reilly, P. and Hutchinson, M. (2017) 'Ephemeral returns: Social network valuations and perceived privacy', ICIS 2017 Proceedings, Seoul, South Korea, 10-13 December, 10 (10pp). Available at: http://aisel.aisnet.org/icis2017/Economics/Presentations/10 (Accessed: 12 July 2021)