NEW YORK ( TheStreet) -- Social media stocks took a huge bump Tuesday following Federal Reserve Chair Janet Yellen's remarks the sector's valuation is overstretched.
In prepared remarks addressing the Senate Banking Committee, Yellen noted, "Valuation metrics in some sectors do appear substantially stretched-particularly those for smaller firms in the social media and biotechnology industries, despite a notable downturn in equity prices for such firms early in the year."
The valuation of high-momentum public technology companies, such as Twitter (TWTR - Get Report) and Facebook (FB - Get Report), as well as private but much-hyped companies, like Uber and Snapchat, have led to concerns of a Silicon Valley bubble. Uber, for instance, was valued at $17 billion last month, surpassing the market capitalization of far more entrenched players such as Hertz (HTZ) and Avis Budget (CAR).
Yellen's comment have triggered a sell-off among many high-profile names in the sector. In mid-morning trading, Facebook had fallen 2.3%, Twitter was off 1.2%, Yelp (YELP - Get Report) fell 4.9%, and LinkedIn (LNKD - Get Report) dropped 1.3%.
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