If the love affair between the public markets and social media companies is over, there's plenty of pain to be felt down the line.
Investors have spent years pouring money into companies somehow described as social media. According to data compiled by DataFox, the number of such U.S. companies to receive funding jumped 24 percent in 2014 to 411 from a year earlier, and another 111 have raised capital so far this year. Back in 2010, the total number was 122.
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So watching Twitter, LinkedIn and Yelp each lose more than one-fifth of their value in the same week is a shock, albeit one that many market watchers have been predicting for months. All three companies delivered quarterly results that fell short of analysts' estimates.
Add to that the decision this week by anonymous messaging app Secret to close its doors and there's perhaps a certain reality setting in. Money really does matter. Fads don't mean sustainable revenue. Millions of users don't equate to business models (Secret had 15 million at its peak).