• by Erik Sass , Staff Writer @eriksass1, July 5, 2013

If you wanted a good laugh today, nothing can beat the news that Michael and Xochi Birch, who founded Bebo back in 2005 and sold it to AOL for $850 million in 2008, recently repurchased their 8-year-old creation for $1 million.

There’s obviously a story here, albeit a brief one: having paid a fortune for the social network, AOL refused to invest any more money in it and basically ran it into the ground. In a humiliating retreat, AOL then sold it to Criterion Capital Partners for no more than $10 million in June 2010. Even more humiliating, it now goes back to the Birches at a 99.88% discount from the original sale price. Michael Birch took a moment from wallowing in his money bin a la Scrooge McDuck to humblebrag on Twitter: “We just bought back Bebo for $1m. Can we actually re-invent it? Who knows, but will be fun trying…” And I have no doubt that it will.

On that note it seems like a good moment to take a look at how social media stocks have fared following a spate of IPOs in the recent years. On the whole their performance has been less than spectacular, although there are some shining exceptions.

At the time of writing Facebook was trading at $24.36, still 36% below its IPO price of $38 back in May 2012. That’s obviously disappointing for anyone who bought in then (or at the peak of around $42 on the day of the IPO) but it’s actually good news when you consider the stock was trading as low as $17.55 in September 2012. Since then the company has managed to reassure investors somewhat by unveiling a mobile advertising strategy and Facebook Exchange, which allows real-time bidding and behavioral targeting with data from third-party Web sites. Will Facebook’s stock price ever return to its IPO level? I previously predicted it will happen in 2014, but at this rate that might be a stretch.

The big social media success story is LinkedIn, which is currently trading at $189.89, up 322% from its IPO price of $45 in May 2011. It’s hard to put a negative spin on that, but it’s worth noting it’s down from a peak of over $200 earlier this year; apparently investors were disappointed that the professional network posted a mere 72% year-over-year increase in revenue and a 300% increase in income in the first quarter. Overall the company still has a strong value proposition, with diverse sources of revenue, including advertising and recruiting, and is hurrying to introduce new mobile features to stay abreast of the smartphone revolution.

Some other social stocks are just, well, abysmal. Casual game maker Zynga, which has relied heavily on Facebook for customer acquisition, is trading at $3.41, down 66% from its IPO price of $10 in December 2011. The company with the cute dog logo has been hit hard by bad acquisitions (Draw Something maker OMGPOP, closed in June a year after Zynga acquired it for $200 million), a fiercely competitive marketplace for players and game-making talent, and the short half-life of even the most popular casual games. Add in slumping sales of “virtual goods” and the challenge of the transition to smartphones, and where do you end up?  Nowhere good, apparently.

Groupon is another stinker, trading at $9.09, down 54.5% from its IPO price of $20 in November 2011. The social commerce site has made some bold moves recently, including firing founder and CEO Andrew Mason and unveiling a plan to transition from email distribution to a searchable deals database, which have helped buoy the stock from $7 just a few weeks ago. But investors are clearly still skeptical about the company’s overall direction: the barriers to entry in the daily deals marketplace are notoriously low (heck, I was thinking about starting one) and merchants are increasingly leery of the steep discounts offered by Groupon to tempt customers.

Returning to the positive side of the ledger sheet, two review-sharing sites, Yelp and Angie’s List, have both fared very well. Yelp is currently trading at $34.88, up 133% from its IPO price of $15 in March 2012, and Angie’s List is trading at $27.72, up 113% from its IPO price of $13 in November 2011. The latter’s performance is especially noteworthy consider the stock experienced the “social media slump” in the days following its debut. Evidently investors like the  business model for review sites, which can easily sell advertising and sponsored search results to related businesses based on keywords -- as long as consumers trust the ratings aren’t fake or adulterated (a problem that Yelp has been cracking down on in recent months).