Recently, there has been an explosion of web 2.0 companies on the Internet. Many have transformed the way we share information across the web. Although many of these programs are free for the user, they are arguably some of the most valuable companies today. Facebook is set to go public shortly and is rumored to have around a $100 billion valuation.

To put that into perspective, Facebook would be worth more than Bank of America, McDonald's, double the size of Ford and roughly 10 times the size of Campbell's Soup. Facebook is the second-most viewed site on the web, slightly behind Google. However, the companies mentioned above are some of the most iconic brands in history, with decades of experience behind them. What are some of the major web 2.0 players and what price tags are investors giving these companies?

YouTube is a household name when it comes to video sharing sites. With approximately 800 million unique visitors and over 3 billion hours of video watched monthly, YouTube has blossomed into the third most-viewed website in the world, according to Purchased by Google in 2006 for $1.65 billion, YouTube is a cash cow, with revenues around $825 million in 2010. YouTube was one of the first web 2.0 companies to carry such a high valuation and has become a sort of role model for web 2.0 startups.

SEE: Conglomerates: Cash Cows Or Corporate Chaos?

Launched in 2008, Groupon features daily deals of items to buy, things to do, places to eat and more. It has revolutionized the coupon business and as a result, the company transformed into a billion dollar business in only four years. On Nov. 4, 2011, Groupon went public, raising roughly $700 million and hitting a valuation near $13 billion, making it the largest Internet IPO since Google in 2004. If you think the valuation seems high, this even takes into account the fact that Groupon has yet to turn a profit. Despite having revenue around $1.6 billion in 2011, Groupon still lost over $270 million.

SEE: 5 Tips For Investing In IPOs

Although this company may not be a household name just yet, the social games it produces are fairly well-known. Zynga is the provider of widely popular games such as Mafia Wars, FarmVille and Draw Something. Since its inception in 2007, Zynga has proven that there is big money in social gaming and that spending millions of dollars to create games on the traditional model may be outdated. Zynga games are played through platforms like Facebook, Apple iOS,, Google Plus and Android.

These games do not require you to spend hundreds of dollars on the console and additional money to purchase games. The games are free, but Zynga makes money through advertisements and virtual goods sold in the games. Although Zynga has turned a profit, in 2011 Zynga had negative net income of about $404 million, with revenue over $1.1 billion. On Dec. 16, 2011, Zynga shares hit the trading floors with investors praising the company with a $7 billion valuation, giving Zynga a higher market capitalization than Electronic Arts, which sells tangible games as opposed to virtual goods.

SEE: 3 Ways Companies Profit From Virtual Goods

The Bottom Line
Web 2.0 companies are transforming industries all across the globe, as they challenge traditional business models and make piles of cash in the process. The web 2.0 era has begun, and these companies should hit their stride after the Facebook IPO comes out.

Related Articles
  1. Personal Finance

    How Tech Can Help with 3 Behavioral Finance Biases

    Even if you’re a finance or statistics expert, you’re not immune to common decision-making mistakes that can negatively impact your finances.
  2. Investing

    Playing The Decline of Traditional Broadcast Media

    Broadcast media is losing viewership as cord cutting by the younger generation triggers subscription losses at cable and satellite companies.
  3. Wealth Management

    Importance of Title in Art Transactions

    A work of art can be a valuable investment, but it’s important to verify that it isn’t stolen property when you purchase it.
  4. Investing

    Will Facebook's New App Leave Siri in the Dust?

    Currently Facebook is testing its new super intelligent virtual assistant, known as, "M". Can this new AI on the block dethrone Apple's Siri?
  5. Investing

    YouTube Red vs. Netflix vs. Spotify

    YouTube Red offers a unique and compelling combination of ad-free video and music streaming.
  6. Stock Analysis IPO: Is it a 'Buy' or Should You Pass?

    Demand for relationships is always high. Now you will have a way to directly invest in the relationship market. But is it priced fairly?
  7. Markets

    4 Companies That Made Billionaires Poor

    Learn how four once-successful companies in the stock market lost their way, and how these companies turned billionaire investors poor.
  8. Stock Analysis

    Is Apple TV Competing or Aligning With Netflix?

    Examine the issue of whether Apple will begin to develop original content and compete with Netflix, or if it will continue to focus solely on content delivery.
  9. Stock Analysis

    If You Had Invested in Qualcomm Right After Its IPO

    Find out about how much you would have if you had bought 100 shares of Qualcomm during its initial public offering and the amount you would receive in dividends.
  10. Mutual Funds & ETFs

    3 ETFs That Invest in Semiconductors

    Obtain information on three of the most widely traded ETFs that investors utilize to gain investment exposure to the important semiconductor industry.
  1. Why does Warren Buffett largely avoid investing in the technology sector?

    Warren Buffett has often said that he avoids investing in the technology sector because he does not like to own stocks in ... Read Full Answer >>
  2. What are examples of popular companies in the Internet sector?

    There have been a number of financial fortunes created by highly successful Internet companies. Some of these firms, such ... Read Full Answer >>
  3. How can I hedge my portfolio to protect from a decline in the Internet sector?

    The best portfolio hedges to protect against declines in the Internet sector are non-cyclical sectors, which tend to remain ... Read Full Answer >>
  4. How are major Internet service providers (ISP) preventing new startups?

    The Internet sector is a dynamic, fast-changing and increasingly competitive space. Even though some Internet service providers ... Read Full Answer >>
  5. What are the main reasons for investing in the internet sector?

    The main reasons for investing in the Internet sector are the higher-than-average earnings growth, profit margins and return ... Read Full Answer >>
  6. What lessons did the tech bubble crash give to investors in the Internet sector?

    The tech bubble crash taught investors that despite their efforts to provide an influx of cash into a rapidly growing market, ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  2. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  3. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
  4. Black Monday

    October 19, 1987, when the Dow Jones Industrial Average (DJIA) lost almost 22% in a single day. That event marked the beginning ...
  5. Monetary Policy

    Monetary policy is the actions of a central bank, currency board or other regulatory committee that determine the size and ...
  6. Indemnity

    Indemnity is compensation for damages or loss. Indemnity in the legal sense may also refer to an exemption from liability ...
Trading Center