FaceBook - head of another DotCom crash?
Discussion
Facebook. 100 times multiple of profit. Please explain the upside for an investor buying in today.
Head of another dotcom crash?? Possibly, but IMO only social media companies..... there are plenty of dotcoms out there can, do and will real money... I think enough people know that to prevent the whole sector getting killed.
Head of another dotcom crash?? Possibly, but IMO only social media companies..... there are plenty of dotcoms out there can, do and will real money... I think enough people know that to prevent the whole sector getting killed.
$1 bil profit on $3.7 bil revenue is pretty good going in anyone's book, particularly on a social media site that is seen by many as a toy rather than a serious tool.
Whether they are worth the valuation will be determined by the market, but the world-is-a-changing and the old rules are quickly getting cast by the wayside. The whole IPO business is an old-school game anyway, and I think will be decreasingly relevant in the years to come, particularly as intelligent people who create companies continue to care more about the product than they do about lining their pockets (Zuckerberg included).
Whether they are worth the valuation will be determined by the market, but the world-is-a-changing and the old rules are quickly getting cast by the wayside. The whole IPO business is an old-school game anyway, and I think will be decreasingly relevant in the years to come, particularly as intelligent people who create companies continue to care more about the product than they do about lining their pockets (Zuckerberg included).
I read an article about this yesterday which made some good points: http://www.huffingtonpost.com/john-f-ince/facebook...
JonnyFive said:
I think Facebooks biggest problem is it's f
king terrible to use at the moment. Sometimes it works well, others it's completely useless. They need to fix their problems. Plus, the iPhone App is junk and has been [strikethrough]for months.[/strikethrough] since its inception
Fixedking terrible to use at the moment. Sometimes it works well, others it's completely useless. They need to fix their problems. Plus, the iPhone App is junk and has been [strikethrough]for months.[/strikethrough] since its inceptionplus, the general mobile site you can access via browser on your phone is much better.
The app isn't that bad really, I only check FB on my phone and even then I may only have a peruse to kill a few minutes every 2-3 days so its slow, clunky workings arent bad enough for me to get annoyed. If you used it every day, couple of times a day, then maybe it could be termed " a load of bobbins".
It's probably also worth noting that a large percentage of those 1 billion FB users will carry it around wherever they go, on a mobile device that has access to every internet site, which will soon be equipped to make direct contactless payments from their bank account and is GPS enabled so knows exactly where they are in relation to everything and everyone else.
New technology is making some revolutionary ideas possible and FB could be a big part of it.
New technology is making some revolutionary ideas possible and FB could be a big part of it.
Facebook has some unique "sticky" propositions. It's a website, but the content keeps changing, bringing people back. The content is also generated by friends and acquaintances and other parties that the user has chosen to keep tabs on, so people don't generally consider what they read to be spam. Facebook itself has an amazing amount of data on users. Product advertisers can therefore reach deeper into their markets. People spend more time on facebook than on any other site, I believe, so it enables advertisers to target users for longer times, giving more exposure to their messages.
Facebook's challenge is to convert all of this into money, and to prevent other people from coming along and taking away their business through poaching users or providing a better social networking product or giving advertisers a better advertising platform or allowing hacks and other service disruptions from making it an unpleasant experience.
Facebook has already monetized some things (advertising), and is working to monetize others. Games, product recommendations and group discounts, events, etc., etc.
So, yes, FB has legs and is valuable, especially with its huge userbase, which is growing.
The mobile app sucks. No doubt they are working on it. That is the future.
Can facebook be cloned? I think so. It's just programming, and if better tech comes along, people will leave. It's hard to leave friends behind and start a community of friends all over again, so that's something any competitor will have to address, either by making the migration for the entire community easy, or by offering something so compelling that people leave of their own accord. Google+ hasn't done so yet...but I hear its userbase is growing. Personally, I am using G+ more and more, I like the integration with Picasa and I like the circles concept.
I do think fb will go by the wayside one day. When will that happen, who knows...certainly not for a year or two. Until then, will it make money? I think so. They already are making a ton of it and the profits are growing. Who's the competition right now? Just Google+ and they are a distant second.
Twitter is interesting...it allows you to keep track of friends (community) and any other entities you are interested in. That could be monetized the same as fb, but if the entities start selling too hard, people will get turned off. I think fb is the better model, at least for me it is, but I don't know enough about twitter.
FB is a good investment at some lower price point. In the short term, I am sure the stock price will go up. But stock prices in the long term are driven by earnings growth. Can fb keep its earnings growing hand over fist? Maybe, but certainly not enough to justify the valuation placed on it already.
The $100-odd billion valuation at 100X earnings is as scary as Mark Zuckerberg's girlfriend!
Facebook's challenge is to convert all of this into money, and to prevent other people from coming along and taking away their business through poaching users or providing a better social networking product or giving advertisers a better advertising platform or allowing hacks and other service disruptions from making it an unpleasant experience.
Facebook has already monetized some things (advertising), and is working to monetize others. Games, product recommendations and group discounts, events, etc., etc.
So, yes, FB has legs and is valuable, especially with its huge userbase, which is growing.
The mobile app sucks. No doubt they are working on it. That is the future.
Can facebook be cloned? I think so. It's just programming, and if better tech comes along, people will leave. It's hard to leave friends behind and start a community of friends all over again, so that's something any competitor will have to address, either by making the migration for the entire community easy, or by offering something so compelling that people leave of their own accord. Google+ hasn't done so yet...but I hear its userbase is growing. Personally, I am using G+ more and more, I like the integration with Picasa and I like the circles concept.
I do think fb will go by the wayside one day. When will that happen, who knows...certainly not for a year or two. Until then, will it make money? I think so. They already are making a ton of it and the profits are growing. Who's the competition right now? Just Google+ and they are a distant second.
Twitter is interesting...it allows you to keep track of friends (community) and any other entities you are interested in. That could be monetized the same as fb, but if the entities start selling too hard, people will get turned off. I think fb is the better model, at least for me it is, but I don't know enough about twitter.
FB is a good investment at some lower price point. In the short term, I am sure the stock price will go up. But stock prices in the long term are driven by earnings growth. Can fb keep its earnings growing hand over fist? Maybe, but certainly not enough to justify the valuation placed on it already.
The $100-odd billion valuation at 100X earnings is as scary as Mark Zuckerberg's girlfriend!
Edited by just me on Friday 4th May 18:21
davepoth said:
...at some time this year they're expecting their 1 billionth user...
These sort of figures always intrigue me. Presumably they are making no claims that these are unique users? In which case, I wonder what the unique user count is.1bn constitutes a very large %age of the world's population when you strip out those too young/old to FBers, people without access etc etc.
russ_a said:
The underclass have well and truly taken over facebook now making it an unpleasant place to browse.
lol...if you invite 10 retards to your house you cant say "dinner parties have really gone down hill"!Secret with FB is only Friend Friends....if mine ever gets close to 100 I'd have a word with myself.
WhereamI said:
Facebook is a good business, the only issue with it is the valuation. At the levels being talked about there is a lot of future growth and profit already factored into the price and so it will be interesting to see if they can deliver.
Good business? Last I heard they had never made a penny profit I don't call that good. Yes they have a big client base but try charging them a membership fee and watch them run.The way I see it the youth of today see it as uncool and a platform used by their dads there is nothing cool to letting your dad see your posts and the old generation don't spend as much time on there as the youth so its time is limited.
BoRED S2upid said:
WhereamI said:
Facebook is a good business, the only issue with it is the valuation. At the levels being talked about there is a lot of future growth and profit already factored into the price and so it will be interesting to see if they can deliver.
Good business? Last I heard they had never made a penny profit I don't call that good. Yes they have a big client base but try charging them a membership fee and watch them run.
That's not a client base, it's a product. Where they need to make money is selling that product to others.ewenm said:
BoRED S2upid said:
WhereamI said:
Facebook is a good business, the only issue with it is the valuation. At the levels being talked about there is a lot of future growth and profit already factored into the price and so it will be interesting to see if they can deliver.
Good business? Last I heard they had never made a penny profit I don't call that good. Yes they have a big client base but try charging them a membership fee and watch them run. That's not a client base, it's a product. Where they need to make money is selling that product to others.BoRED S2upid said:
Have they made a penny profit though?
Yes, they made $1 billion profit last year on $3.7 billion revenue and that , I believe (but wait to be corrected), was thier first year at attempting to make it profitable when they hired that woman who had made google into a revenue making machine,blindswelledrat said:
BoRED S2upid said:
Have they made a penny profit though?
Yes, they made $1 billion profit last year on $3.7 billion revenue and that , I believe (but wait to be corrected), was thier first year at attempting to make it profitable when they hired that woman who had made google into a revenue making machine,BoRED S2upid said:
ewenm said:
BoRED S2upid said:
WhereamI said:
Facebook is a good business, the only issue with it is the valuation. At the levels being talked about there is a lot of future growth and profit already factored into the price and so it will be interesting to see if they can deliver.
Good business? Last I heard they had never made a penny profit I don't call that good. Yes they have a big client base but try charging them a membership fee and watch them run. That's not a client base, it's a product. Where they need to make money is selling that product to others.http://adage.com/article/digital/facebook-files-ip...
Deva Link said:
What on earth did they spend $2.7Bn on?
Servers for Zuckerberg's bedroom and a few new hoodies 
It will be interesting to see how well FB lasts. I won't be sinking money into it - many will, and I suspect many will end up sitting on a loss after the initial furore dies down.
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