Still Too Pricey(online.barrons.com)
online.barrons.com
Still Too Pricey
http://online.barrons.com/article/SB50001424053111904706204578002652028814658.html
12 comments
No offense, but you hardly sound like an expert to me too. Given your defensive position on fb, I'm going to go ahead and assume you own a few shares of fb (or you are contemplating buying) and it pisses you off to see anyone say anything negative about your psychological position.
Think real hard about why it bothers you when a stranger says negative things about fb. Be careful about closing yourself off to those who take opposing positions. Egos will want to remain consistent with past choices, but the world evolves and changes constantly.
Shut off the ego and shut off the emotions. Listen to others opinions then go and do what you feel is right. Opinions are water under the bridge.
You shouldn't be tiring of any opinions if you are a serious investor. Many analysts have fb pegged at near $15. If they are all wrong, then you don't have to try to convince others that everyone is wrong, just go into the market and buy as much stock as possible and just wait for the efficiency of the market to catch up. FREE MONEY...if you're right :)
Think real hard about why it bothers you when a stranger says negative things about fb. Be careful about closing yourself off to those who take opposing positions. Egos will want to remain consistent with past choices, but the world evolves and changes constantly.
Shut off the ego and shut off the emotions. Listen to others opinions then go and do what you feel is right. Opinions are water under the bridge.
You shouldn't be tiring of any opinions if you are a serious investor. Many analysts have fb pegged at near $15. If they are all wrong, then you don't have to try to convince others that everyone is wrong, just go into the market and buy as much stock as possible and just wait for the efficiency of the market to catch up. FREE MONEY...if you're right :)
I'm certainly no expert when it comes to evaluation of a company. These are merely my thoughts as a tech geek and developer. When Google IPO'd some experts made claims that ( I am paraphrasing here), Google is entering a crowded Search market and the real money was in portals.
As a geek , I fully grasp Facebook's 12.24 pages/visit stat. Even Reddit is just a hair below, at 10.6. (source: Alexa). That type of engagement is insanely hard to get for a site as big as Facebook. Investors do not look at these things because they do not understand what they mean. They look at traditional investor metrics.
If Facebook included ONE banner ad across the top of their pages, their revenue would soar. They are choosing their own path and are paying the price for it right now. Time will tell if their method will work out.
What I do know is that investors are a finicky bunch. When Zuck spoke at Disrupt 2 weeks ago investors decided to buy Facebook and it rose 4 dollars since then. The reality is nothing had changed, but in their eyes it just looked better. Fair enough, that is how the game is played.
If an investment firms evaluates traditional companies like Borders, Best Buy, or Radioshack then I would not even question their expertise. They are a very knowledgeable bunch when it comes to traditional companies.
However I do not believe their analysis of the tech companies that exist on the internet is as accurate, simply because they do not fully understand the industry and web.
As a geek , I fully grasp Facebook's 12.24 pages/visit stat. Even Reddit is just a hair below, at 10.6. (source: Alexa). That type of engagement is insanely hard to get for a site as big as Facebook. Investors do not look at these things because they do not understand what they mean. They look at traditional investor metrics.
If Facebook included ONE banner ad across the top of their pages, their revenue would soar. They are choosing their own path and are paying the price for it right now. Time will tell if their method will work out.
What I do know is that investors are a finicky bunch. When Zuck spoke at Disrupt 2 weeks ago investors decided to buy Facebook and it rose 4 dollars since then. The reality is nothing had changed, but in their eyes it just looked better. Fair enough, that is how the game is played.
If an investment firms evaluates traditional companies like Borders, Best Buy, or Radioshack then I would not even question their expertise. They are a very knowledgeable bunch when it comes to traditional companies.
However I do not believe their analysis of the tech companies that exist on the internet is as accurate, simply because they do not fully understand the industry and web.
The 1990s tech bubble was all about those "non-traditional" metrics like page views and "eyeballs". Turns out they are a horrible predictor of the intrinsic value of a company. So investors went back to the boring, old metrics that, regardless of industry, seem to be able to provide some true indication of the health and value of a company.
I will agree that Google and Apple aren't the right companies to compare FB with. But FB is having mobile problems, and Apple and Google do seem to have reasonable mobile strategies, so I can understand why analysts do that.
I will agree that Google and Apple aren't the right companies to compare FB with. But FB is having mobile problems, and Apple and Google do seem to have reasonable mobile strategies, so I can understand why analysts do that.
So you admit that you're not an expert in evaluating companies and think that analysts are only qualified to evaluate brick and mortar retail companies, and on that basis $15 per share sounds too low?
Let me give you a tip: Professional investors absolutely understand the value of pageveiws and engagement and all that fun stuff. It's why facebook was able to basically name their multiple with the IPO underwriters and it was the biggest offering in history.
However, when the rubber meets the road, it is simply not the most important metric nor is it any guarantee of long-term future profits (forget about current profitability for the sake of argument.)
Is a TV channel with the highest ratings automatically the best investment? What if their costs are insane? What if they're about to lose some great shows or the popularity of them is waning. Hey, it's the most popular station, so it has to be worth the most, right?? To say otherwise isn't an issue of not "getting it," it's a matter of understanding that business is business whether we're talking websites, widgets, or retail.
Let me give you a tip: Professional investors absolutely understand the value of pageveiws and engagement and all that fun stuff. It's why facebook was able to basically name their multiple with the IPO underwriters and it was the biggest offering in history.
However, when the rubber meets the road, it is simply not the most important metric nor is it any guarantee of long-term future profits (forget about current profitability for the sake of argument.)
Is a TV channel with the highest ratings automatically the best investment? What if their costs are insane? What if they're about to lose some great shows or the popularity of them is waning. Hey, it's the most popular station, so it has to be worth the most, right?? To say otherwise isn't an issue of not "getting it," it's a matter of understanding that business is business whether we're talking websites, widgets, or retail.
> As a geek , I fully grasp Facebook's 12.24 pages/visit stat. Even Reddit is just a hair below, at 10.6. (source: Alexa). That type of engagement is insanely hard to get for a site as big as Facebook. Investors do not look at these things because they do not understand what they mean. They look at traditional investor metrics.
I think they grasp it. The reality is when it comes to financial matters, engagement isn't the only (or even most important) metric. In fact, it doesn't matter squat if you can't monetize it. And that's exactly the stumbling block FB has run into.
You can retort engagement is important because it's a sign of a happy user & monetization shouldn't matter. Which is fine, but then the stock price shouldn't matter either.
I think they grasp it. The reality is when it comes to financial matters, engagement isn't the only (or even most important) metric. In fact, it doesn't matter squat if you can't monetize it. And that's exactly the stumbling block FB has run into.
You can retort engagement is important because it's a sign of a happy user & monetization shouldn't matter. Which is fine, but then the stock price shouldn't matter either.
The biggest red flag that I see when it comes to fb stock is that it has single digit institutional ownership. Even yahoo has 75% institutional ownership. Fb has like 7% IO. Big money is staying away from fb and that is a huuuuge red flag.
Institutional ownership is a vote of confidence for the long haul. Mutual funds and pension funds buy long and cannot participate in short selling.
Big money knows something about fb long term prospects that all of us don't. I don't know what that is but their actions speak louder than anybody's opinions can.
Institutional ownership is a vote of confidence for the long haul. Mutual funds and pension funds buy long and cannot participate in short selling.
Big money knows something about fb long term prospects that all of us don't. I don't know what that is but their actions speak louder than anybody's opinions can.
Has FB sold enough stock for IOs to get a double-digit percentage? Zuck alone is controlling over 50%, thanks to Andreeson. A more interesting question is, of the stock that's been made publicly available, what percentage was purchased by IOs?
(FWIW, I wouldn't touch FB right now, either. There are a couple of high risk issues I think they have to deal with, and I'm not sure they will come through unscathed.)
(FWIW, I wouldn't touch FB right now, either. There are a couple of high risk issues I think they have to deal with, and I'm not sure they will come through unscathed.)
I wonder if Wallstreet fully grasps what Facebook is all about and how it fits into the grand scheme of things. Perhaps looking at traditional markers for evaluating a company like Facebook isn't working?
They fail to realize that Facebook is the most traffic'd website in the world. (According to Alexa: http://www.alexa.com/topsites).
Somehow $15 doesn't sound right.
Too young to remember the dotcom boom? If I gave everyone in the world a $1 every time they visited my site I could also have the most traffic'd site in the world, but that wouldn't make my site worth any money.
Of course FB isn't like that, but the point is that traffic is worthless until you can monetize it. IMHO, their biggest problem is monetizing their users without running them away.
Too young to remember the dotcom boom? If I gave everyone in the world a $1 every time they visited my site I could also have the most traffic'd site in the world, but that wouldn't make my site worth any money.
Of course FB isn't like that, but the point is that traffic is worthless until you can monetize it. IMHO, their biggest problem is monetizing their users without running them away.
I wonder if Wallstreet fully grasps what Facebook is all about and how it fits into the grand scheme of things.
I think I'm with Wall Street.
I think I'm with Wall Street.
> If I gave everyone in the world a $1 every time they visited my site I could also have the most traffic'd site in the world, but that wouldn't make my site worth any money.
Sorry to quibble, but no you couldn't. If you had 7B dollars and you literally made this offer to every person in the world, you still would not get Facebook's traffic.
And in any case, Facebook has a lot more than traffic. Just because their monetization is lackluster so far doesn't mean they don't have a ton of interesting directions to go in. All this hand-wringing and analysts attempting to project a realistic valuation for Facebook is just anguish and sour grapes over being hoodwinked by the hype generated by a bunch of greedy investment bankers.
However if you take all the IPO hoopla out of the equation, and you see that Facebook is still growing, still evolving, and has a lot of unique assets that could propel in the company in new directions. I wouldn't bet against Facebook just because some cranky financial experts want me to believe they know where Facebook is headed. They don't know. Nobody knows.
Sorry to quibble, but no you couldn't. If you had 7B dollars and you literally made this offer to every person in the world, you still would not get Facebook's traffic.
And in any case, Facebook has a lot more than traffic. Just because their monetization is lackluster so far doesn't mean they don't have a ton of interesting directions to go in. All this hand-wringing and analysts attempting to project a realistic valuation for Facebook is just anguish and sour grapes over being hoodwinked by the hype generated by a bunch of greedy investment bankers.
However if you take all the IPO hoopla out of the equation, and you see that Facebook is still growing, still evolving, and has a lot of unique assets that could propel in the company in new directions. I wouldn't bet against Facebook just because some cranky financial experts want me to believe they know where Facebook is headed. They don't know. Nobody knows.
>I wouldn't bet against Facebook just because some cranky financial experts want me to believe they know where Facebook is headed. They don't know. Nobody knows.
The last two sentences are precisely why analysts are "cranky" and institutional ownership of this stock is so faint.
A reasonable investor makes an investment decision based on the info they have and the prospect of discounted future cash flows. At this point it is clear not even Facebook management really knows where they're headed. Just where the money is. How does a reasonable investor value that? I wouldn't bet on facebook at any price just because they have critical mass on a free social network today.
Edit: What I meant by the last statement was that valuation matters. Obviously there is a price at which Facebook stock is fair or even undervalued.
The last two sentences are precisely why analysts are "cranky" and institutional ownership of this stock is so faint.
A reasonable investor makes an investment decision based on the info they have and the prospect of discounted future cash flows. At this point it is clear not even Facebook management really knows where they're headed. Just where the money is. How does a reasonable investor value that? I wouldn't bet on facebook at any price just because they have critical mass on a free social network today.
Edit: What I meant by the last statement was that valuation matters. Obviously there is a price at which Facebook stock is fair or even undervalued.
> Sorry to quibble, but no you couldn't. If you had 7B dollars and you literally made this offer to every person in the world, you still would not get Facebook's traffic.
I'm pretty sure you would. It's a dollar every time they visit the site, not one dollar per person.
I'm pretty sure you would. It's a dollar every time they visit the site, not one dollar per person.
FB is not comparable to a dotcom book company.
If I gave everyone in the world a $1 every time they visited my site I could also have the most traffic'd site in the world
Perhaps, but your site would probably not have the marketing treasure-trove that FB has. FB needs to learn how to use it.
If I gave everyone in the world a $1 every time they visited my site I could also have the most traffic'd site in the world
Perhaps, but your site would probably not have the marketing treasure-trove that FB has. FB needs to learn how to use it.
The danger is that "You don't understand, everything is different now! The old rules don't apply" type thinking sounds like the first dot-com bubble. How do we know if things are different now, or if this is a bubble.
Rovio excels at monetization on mobile. Same with Popcap. Obviously these companies' mobile products are different than facebook's.
Why is mobile monetization so difficult? Seems like a company that can monetize the desktop experience can do mobile too. They're both computers on which users consume information. If ads work on the desktop then I can't see a reason why they won't work on mobile.
Why is mobile monetization so difficult? Seems like a company that can monetize the desktop experience can do mobile too. They're both computers on which users consume information. If ads work on the desktop then I can't see a reason why they won't work on mobile.
>Why is mobile monetization so difficult? Seems like a company that can monetize the desktop experience can do mobile too.
From the article: The paradigm shift to the app model is unequivocally bad for Facebook, [...] Facebook is designed to be open all the time, to be visited in the gaps of the day or as a platform in its own right, bridging to a variety of activities related to the social network. [...] Why use Facebook to play a game, read an article, manage your photos, stream music, or shop, [...] when you can select a specialized app directly.
From the article: The paradigm shift to the app model is unequivocally bad for Facebook, [...] Facebook is designed to be open all the time, to be visited in the gaps of the day or as a platform in its own right, bridging to a variety of activities related to the social network. [...] Why use Facebook to play a game, read an article, manage your photos, stream music, or shop, [...] when you can select a specialized app directly.
How can the shift to mobile possibly reduce volume of FB usage? I see friends and family consuming Facebook trash dozens of times per day on their mobile devices. If anything FB consumption has gone up (at least from my perspective). Look at the review count for the iOS app. That app is extremely popular. So why not just put a banner ad in the app?
Here is my theory, probably wrong but I'll throw it out there:
Traders (as opposed to investors) are besides themselves with annoyance at the way the market is treating Facebook. If you bought at 18 and sold at 22 you made 22% on your investment in about a month. (annualized at 264%, woohoo :-) And yet if you're a trader there aren't any signals or technical stats or any of their other tools that they use to tell you to do this.
I've observed when this happens people lash out and tell the people who bought at 18 they were insane, and that it went to 22 was a fluke of chance, and that FB is crazy. Etc etc.
Except that there is a lot of randomness in the world, and in trading, and as folks have pointed out here repeatedly it is unpredictable by its very nature.
So while FB gyrates it will infuriate the traders, they want consistent rise, or consistent fall, or rise to peak followed by slow fall to minimum. Too bad.
Traders (as opposed to investors) are besides themselves with annoyance at the way the market is treating Facebook. If you bought at 18 and sold at 22 you made 22% on your investment in about a month. (annualized at 264%, woohoo :-) And yet if you're a trader there aren't any signals or technical stats or any of their other tools that they use to tell you to do this.
I've observed when this happens people lash out and tell the people who bought at 18 they were insane, and that it went to 22 was a fluke of chance, and that FB is crazy. Etc etc.
Except that there is a lot of randomness in the world, and in trading, and as folks have pointed out here repeatedly it is unpredictable by its very nature.
So while FB gyrates it will infuriate the traders, they want consistent rise, or consistent fall, or rise to peak followed by slow fall to minimum. Too bad.
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Traffic doesn't pay the bills. At some point, all businesses come down to sell something for less than it costs to make it.
Apple is very good at this in the traditional sense. Google has found a way to sell people who are looking for something to people who are selling that thing.
Facebook? The jury is out. They can capture a lot of attention. Right now, the easiest businesses to compare FB to are TV networks. Unfortunately, people don't really like being interrupted by a few-minute-long commercial break on the internet.
Where is Facebook in 5 years. Either they figure something out, and are huge, they find a small niche profit source, or they go the way of AOL circa Y2k. How you rate the likeliness of these outcomes determines how you should price the stock.
Apple is very good at this in the traditional sense. Google has found a way to sell people who are looking for something to people who are selling that thing.
Facebook? The jury is out. They can capture a lot of attention. Right now, the easiest businesses to compare FB to are TV networks. Unfortunately, people don't really like being interrupted by a few-minute-long commercial break on the internet.
Where is Facebook in 5 years. Either they figure something out, and are huge, they find a small niche profit source, or they go the way of AOL circa Y2k. How you rate the likeliness of these outcomes determines how you should price the stock.
Twitter has almost twice the mobile revenue of Facebook while Facebook has more users on mobile than Twitter has on the entire platform. Best case scenario as an investor, you look at this as an area that needs serious improvement.
$15 / share is a fair valuation given Facebook's cash flow profile and top-line decelerating growth.
Said back on 19th May (the day after FB's IPO):
"asset managers [do is] look at Free Cash Flow to Equity, not Net Income. On a FCF to Equity valuation, FB IPOed at +220x. Even at a generous P/E or FCF/E ratio of 25x, Facebook's Free Cash Flow needs to go from $450m to $4,000m in the next 24-36 months. Do you think that is possible? After looking at their infrastructure needs I think not." http://news.ycombinator.com/item?id=4002988
Said back on 19th May (the day after FB's IPO):
"asset managers [do is] look at Free Cash Flow to Equity, not Net Income. On a FCF to Equity valuation, FB IPOed at +220x. Even at a generous P/E or FCF/E ratio of 25x, Facebook's Free Cash Flow needs to go from $450m to $4,000m in the next 24-36 months. Do you think that is possible? After looking at their infrastructure needs I think not." http://news.ycombinator.com/item?id=4002988
Instead of writing an opinion piece that will likely influence a few people, why doesn't this guy use his exemplary knowledge of Facebook and the stock market for profit? Why not keep this information to himself and short $fb or sell the information to an institutional investor?
My guess is that his "knowledge" is worth more as an article that he got paid $25 for writing than it is in actual practice.
My guess is that his "knowledge" is worth more as an article that he got paid $25 for writing than it is in actual practice.
You can divide "Wall Street" into two camps, buy-side and sell-side. Sell-side makes its money on commissions on trades. They publish a lot of analysis as a loss-leader to attract new trading business. The buy-side makes its money by owning stuff that appreciates in value. When you hear any sort of stock advice, first figure out which side it's coming from, then you can put it in context.
You're commenting on a piece from Barron's -a widely regarded financial newspaper since 1921- not something from a blogmill.
So the better question is this: why do any of the professional journalists covering finance and capital markets do it when they could be participants instead? Maybe they like reporting more. It's kind of like asking why aren't all astronomers astronauts?
So the better question is this: why do any of the professional journalists covering finance and capital markets do it when they could be participants instead? Maybe they like reporting more. It's kind of like asking why aren't all astronomers astronauts?
Because participating the stock market isn't risk free.
Even if you are 100% correct (an impossibility) that a stock ought to be valued at a certain price, there is no guarantee that you can place your orders at the right time in order to make a profit on it minus transaction costs.
There's a common saying that goes loosely: 'the market can stay irrational longer than you can stay solvent'.
So given that likelihood, its not surprising that some choose to take a guaranteed payday by writing an article, instead of going forth and rolling the dice.
Even if you are 100% correct (an impossibility) that a stock ought to be valued at a certain price, there is no guarantee that you can place your orders at the right time in order to make a profit on it minus transaction costs.
There's a common saying that goes loosely: 'the market can stay irrational longer than you can stay solvent'.
So given that likelihood, its not surprising that some choose to take a guaranteed payday by writing an article, instead of going forth and rolling the dice.
For what it's worth, that's a real publication, not Demand Media. The article should have netted him a couple orders of magnitude more than $25.
He's already shorted the market and is now executing the short-sell version of a pump-and-dump ... or maybe he's actually ethical and doesn't trade in the companies he analyzes. How would we know the difference?
> Instead of writing an opinion piece that will likely influence a few people, why doesn't this guy use his exemplary knowledge of Facebook and the stock market for profit? Why not keep this information to himself and short $fb or sell the information to an institutional investor?
Couldn't the same be said for anyone giving financial advice.
(Note, this isn't necessarily a defense of those who do. :)
Couldn't the same be said for anyone giving financial advice.
(Note, this isn't necessarily a defense of those who do. :)
First and foremost, eric: it is in his best interest to inform everyone about his opinion. If more follow, his short option can only bring more profits.
Second of all, being right in opinion about market is the best damn PR you can imagine. After all, its all about profits. If you "guessed" market good enough in the past, you more likely attract rich investors going forward.
So as much as this guy can short the stock for $5MM himself and keep his mouth shut, it is much smarter to short it for the same amount, wait for others to join helping his position to grow, and if hes right on his bet, attract investors with $50MM in the future.
Second of all, being right in opinion about market is the best damn PR you can imagine. After all, its all about profits. If you "guessed" market good enough in the past, you more likely attract rich investors going forward.
So as much as this guy can short the stock for $5MM himself and keep his mouth shut, it is much smarter to short it for the same amount, wait for others to join helping his position to grow, and if hes right on his bet, attract investors with $50MM in the future.
They don't even make a firm stance in saying that it's worth $15/share. With decelerating growth and the fact they can't figure out how to monetize mobile I have no idea where they figure FB is worth that much. A 47x multiple on these guys is a joke.
This recent rally is akin to a dead cat bounce. Nothing in the market goes straight up or straight down. We'll be seeing sub-$15 soon.. Consider it a x-mas present.
Actually while we're on the topic.. the Dow is getting close to 14,000 again; our high from 2008. Don't be surprised to see a double top on the markets and then a sharp retrace afterward.
This recent rally is akin to a dead cat bounce. Nothing in the market goes straight up or straight down. We'll be seeing sub-$15 soon.. Consider it a x-mas present.
Actually while we're on the topic.. the Dow is getting close to 14,000 again; our high from 2008. Don't be surprised to see a double top on the markets and then a sharp retrace afterward.
Actually I think their recent approach to monetizing the mobile market is quite clever.
http://techcrunch.com/2012/09/18/facebook-mobile-ad-network/
http://techcrunch.com/2012/09/18/facebook-mobile-ad-network/
It would be awesome if mobile developers could put targeted ads in their apps. I've tried Admob and Apple's iAds and there's literally no targeting. Two apps, one that focuses exclusively on pizza and another app that focuses exclusively on beer will show the same totally irrelevant ad for, say, some game app or "free text messages!".
how much of that may be due to not having enough relevant inventory? there's definitely a chicken/egg problem involved in targeted ad serving, but you'd have thought someone (apple?) might have been able to crack that nut by now.
In my particular case I don't think there was an inventory limitation issue. Reason is websites with Adsense addressing the same niche were serving extremely relevant and targeted ads while my Android app with Admob just gets junk. The obvious question is how does the Admob banner know about the app's contents? On the Admob site there's a note saying that the app's description will be used to target ads. However this doesn't seem to work or I'm misunderstanding. Either way my ads still suck.
>"Don't be surprised to see a double top on the markets and then a sharp retrace afterward."
The Fed is pumping money into the system, and has said they're going to do it indefinitely. The stock market is going up (at least in nominal terms).
At least, that's where my money is.
The Fed is pumping money into the system, and has said they're going to do it indefinitely. The stock market is going up (at least in nominal terms).
At least, that's where my money is.
The market will continue to go up until it doesn't anymore.
Technical Analysis is your only friend.
Or to put it another way; if the fed is pumping money into the market it only makes it easier for others to exit.
Technical Analysis is your only friend.
Or to put it another way; if the fed is pumping money into the market it only makes it easier for others to exit.
Exit to where? Treasuries at all time low yields?
20% of people invest in stocks, and these people control almost 50% of wealth in America. A major goal of QE is to pump the market up to generate a wealth effect for these people, and (hopefully) pull the economy up with it. You can see that this happened by checking out the SPY chart from Nov. 2008 (QE1) onward.
As the other commenter noted, don't fight the Fed. Contrary to what you read in the popular media, they know what they are doing. If you hopped on board in '08, you got massive returns the past few years.
20% of people invest in stocks, and these people control almost 50% of wealth in America. A major goal of QE is to pump the market up to generate a wealth effect for these people, and (hopefully) pull the economy up with it. You can see that this happened by checking out the SPY chart from Nov. 2008 (QE1) onward.
As the other commenter noted, don't fight the Fed. Contrary to what you read in the popular media, they know what they are doing. If you hopped on board in '08, you got massive returns the past few years.
As the saying goes, "Don't fight the Fed." Technical Analysis is voodoo and tea leaves.
The Dow could reach 18,000 in a year, or 5,000. FB has $billions to devise new profit streams.
Somehow this link got renamed (not by me). The cover of Barron's says "Facebook is Worth $15".
See for yourself: http://barrons.wsj.net/public/resources/images/ON-AY643_cove...
See for yourself: http://barrons.wsj.net/public/resources/images/ON-AY643_cove...
Facebook could expand or replace their customer base.
Currently their major (only?) customers are companies paying Facebook to place ads in front of people who don't want to see them and may in fact try hard not to see them.
Although ads has worked for radio and television, it seems shaky to me. It reminds me of the early days of television and radio, where shows on TV were largely plays adopted to TV, because that's what people did with the preceding medium, and news programming was an announcer reading the newspaper, because the newspaper was where news came from prior to radio and TV.
Ads worked for the preceding media, but that's no reason not to innovate monetization on the web.
Facebook could, instead or in addition, charge money to its users for access to Facebook. They could sell their mobile app. They could ... well, they're smarter than me, they can do their own innovation. :)
If your uses don't commit to use by spending money, then they're essentially transient, waiting for the next free thing. Make Facebook a service that people don't complain about at every changed policy and implementation, make it so good that people will pay to use it, and I'll be impressed. (Not to take away at all from the accomplishment so far.)
Currently their major (only?) customers are companies paying Facebook to place ads in front of people who don't want to see them and may in fact try hard not to see them.
Although ads has worked for radio and television, it seems shaky to me. It reminds me of the early days of television and radio, where shows on TV were largely plays adopted to TV, because that's what people did with the preceding medium, and news programming was an announcer reading the newspaper, because the newspaper was where news came from prior to radio and TV.
Ads worked for the preceding media, but that's no reason not to innovate monetization on the web.
Facebook could, instead or in addition, charge money to its users for access to Facebook. They could sell their mobile app. They could ... well, they're smarter than me, they can do their own innovation. :)
If your uses don't commit to use by spending money, then they're essentially transient, waiting for the next free thing. Make Facebook a service that people don't complain about at every changed policy and implementation, make it so good that people will pay to use it, and I'll be impressed. (Not to take away at all from the accomplishment so far.)
If Facebook charged for basic use, their user base would plummet quickly, which would make that use not very valuable.
If Facebook was smart enough to think of effective new ways to make money that we haven't thought of, they'd be doing them now.
If Facebook was smart enough to think of effective new ways to make money that we haven't thought of, they'd be doing them now.
P/E ratio is never irrelevant. I said soon after the IPO that FB will go down to $10 and I have not seen anything yet to change my mind.
$10 is the price point I've been expecting as well.
If you're into this sort of thing, Aswath Damodaran teaches a valuation class at NYU which is online now, and he arrived at an FB valuation of $24.
http://people.stern.nyu.edu/adamodar/New_Home_Page/webcasteq...
http://aswathdamodaran.blogspot.com/2012/08/facebook-face-pl...
http://people.stern.nyu.edu/adamodar/New_Home_Page/webcasteq...
http://aswathdamodaran.blogspot.com/2012/08/facebook-face-pl...
It will also be incredibly difficult for Facebook to monetize its games, which still represent a sizable portion of their .com revenue. No game company will be willing to give them a cut of their mobile revenue when Apple is already taking a 30% take. That should be especially concerning to investors.
I am tiring of people struggling to try to monetize all web traffic. It seems like some people just cannot accept that there may be noncommercial elements of the web and that those elements might be extremely popular. They might even be the most popular elements of the entire web. Imagine that.
If someone knew it is overpriced and it will go down further they could make millions by shorting. I'm happy for the author's future riches.
Just a stock I have no interest of owning.
I like how some firms decide to throw in P/E comparisons to Apple and Google (Two seasoned juggernaut companies.) . Yet LinkedIn is also a social network, has an absurd P/E ratio over 100, but that's okay.
"Anyone who owns Facebook should be exceptionally troubled that they're still trying to 'figure out' mobile monetization and had to lay out $1 billion for Instagram because some start-up had figured out mobile pictures better than Facebook," says one institutional investor.
These are what the experts have to say? He hardly sounds like an expert to me. Tell me a company who excels at mobile monetization.
I wonder if Wallstreet fully grasps what Facebook is all about and how it fits into the grand scheme of things. Perhaps looking at traditional markers for evaluating a company like Facebook isn't working?
They fail to realize that Facebook is the most traffic'd website in the world. (According to Alexa: http://www.alexa.com/topsites).
Somehow $15 doesn't sound right.