patrick.net

You forgot zynga. I wonder if this could become the biggest company in the world shortly thereafter. It wouldn't take much to top apples market cap if they're starting it off with a 100B market cap.

They have nothing more than peoples information + a wall for people to write on, this company doesn't even have much staying power.

Go facebook. Funny, how people will diss you for not being "on facebook" Good social preoccupation though, people are bored, give em something to play around with on the computer which does not require much thought. Not being real social, I don't plan on setting up an account.

pkennedy says

They have nothing more than peoples information + a wall for people to write on, this company doesn't even have much staying power.

Think about the superbowl, the type of money advertisors will pay for 30M viewers.

With Facebook, you have, say 500M users spending hours everyday. Not only are there tons of users, but they are the sticky type. They literally can have a superbowl everyday.

Simply an amazing company. 1.5B operating profit on 3.8B Gross or 40% operating margin. They have the type of business that can get 60% operating margin as each incremental revenue does not cost them anything.

Do you guys think Facebook is a worthy purchase? I kind of understand that they make money by selling personal information, but I don't know how much money they actually make which makes me weary on the issue of buying their stocks.

I'll add to what Fortwayne says by injecting...

Not only that, but Facebook is this decade's "Petrock".
Compound the Petrock effect with Facebook and Google's practices, of selling private info. It's really only matter of time before people push back. It will be in fashion to not be on Facebook or other social networks for that matter.

Or even if that doesn't do them in, new laissez-faire semantics of future internet standards will. Example...

Much of the new programming design, patterns and practices are designed to intrinsically bake much of Social Networking attributes into new technologies and standards. By that I mean, the future will have Facebook or Google like services built into the web architecture. Where there wont have to be a centralized repository of information. But rather, the information will be stored collectively. Whether data resides on the cloud or on a desktop hard drive.

We'll all be connected with or with out Facebook or Google.
At which time those services will go the way of the milk man.

SFace says

Simply an amazing company. 1.5B operating profit on 3.8B Gross or 40% operating margin. They have the type of business that can get 60% operating margin as each incremental revenue does not cost them anything.

Advertising... thats all. There is only a limited amount of advertising dollars that can be spent each year.

The GOP says

Much of the new programming design, patterns and practices are designed to intrinsically bake much of Social Networking attributes into new technologies and standards. By that I mean, the future will have Facebook or Google like services built into the web architecture. Where there wont have to be a centralized repository of information. But rather, the information will be stored collectively. Whether data resides on the cloud or on a desktop hard drive

Its called CRM, customer resource managmenet.. and its been around for some time since the early 90s. But the idea goes back to the 80s.

chanakya4773 says

LinkedIn is very similar in profession network and i am not seeing them making tons of money.

On the contrary, companies are willing to pay good money for recruitment purposes. Most High-tech Silicon Valley companies pay a bonus of $1.5k to $3k per hire. And they pay up to ten thousand in referral bonus for a V.P.

LinkedIn's position isn't easily usurped. Many people added their work information and very rarely checked the account again. It took a long time to accumulate this many users.

@sface

The problem is people don't leave facebook. They won't do anything. Everyone is trying out advertising on facebook, everyone is trying to create a facebook hook, but no one is getting there. Every large media player is trying to figure out what to do with facebook, and everyone is failing. The best you can do is get people to like your page. Facebook is a massive disappointment.

Something like google was a dead ringer, people put in 5 cent bids when it came out and made money the next day. It was a cash making machine for everyone who tried it.

I haven't heard of any facebook sucess stories yet, and that's with the best and brightest working on strategies. The difference is you could put up an ad on google and make money tomorrow, but the best can't make anything off facebook. views are not all the same and with the internet you can *really* dig into what you're paying for. You can calculate out which hours of the day are giving you the best return on value, from which part of the country, from gender and age preferences. It's possible to dig down and deep and see if you're making money and how to fix it. Facebook allows you to go even further, you can target exact matches, but you'll get nothing.

everything says

Funny, how people will diss you for not being "on facebook"

What loser would do that?

FortWayne says

Do you guys think Facebook is a worthy purchase?

I think it's a giant ponzi scheme. People are going to get fleeced when they realize that Facebook doesn't actually produce anything and its customers can easily go elsewhere and Facebook/Twitter advertising doesn't work. It's all noise.

Have you ever bought anything because you saw it on Facebook or because a friend tweeted about it? Then again, sometimes I underestimate just how stupid the average person is.

tdeloco says

Most High-tech Silicon Valley companies pay a bonus of $1.5k to $3k per hire. And they pay up to ten thousand in referral bonus for a V.P.

you dont need linkedin to do this..workers had networks in the past... the old rollerdex... its been around for a long time. its done to reduce costs and avoid head hunters which charge 4-5x more than referral bonus.

tdeloco says

LinkedIn's position isn't easily usurped. Many people added their work information and very rarely checked the account again. It took a long time to accumulate this many users.

Exactly. I've never even gotten a job lead from LinkedIn despite having a sizable network. Everyone just friends everyone else they don't despise in hopes that if you get a large enough network then the job offers will role in.

The problem is that no one actually has a job offer that they pass along to their own network. If I get a job offer that I'm not interested in, I'll email it to a college, but I won't use LinkedIn to pass it along to my network. Nobody else does either. As such, the network is worthless.

Granted, you'll get spam from recruiters, but that doesn't count.

Facebook is lame and will fall away to nothing. Humanity needs something way cooler and monumental than status updates and relationship status.

GS pump and dump.

Glad my buddies already made a fortune off this and they have plenty left for the IPO. (but I'm not envious - lol) I knew I should have taken that job =/

But yes, I agree. This thing is a turd in the long run.

@Dan

Recruiters are more and more using linked in for finding recruits. You might consider their emails as spam, but they're using your friends network to see what kind of person you are as well. If you post about something you're looking for, you might get a response. Also having managers and others can help as those will jump from one company and years later realize they need X person and while flipping through linkedin remember they worked with you. Almost every company I've worked at, there are groups of people who have been hired due to them knowing someone from X position years ago.

chanakya4773 says

LinkedIn is very similar in profession network and i am not seeing them making tons of money.

People aren't addicted to Linkeedin.

Dan8267 says

FortWayne says

Do you guys think Facebook is a worthy purchase?

I think it's a giant ponzi scheme. People are going to get fleeced when they realize that Facebook doesn't actually produce anything and its customers can easily go elsewhere and Facebook/Twitter advertising doesn't work. It's all noise.

Have you ever bought anything because you saw it on Facebook or because a friend tweeted about it? Then again, sometimes I underestimate just how stupid the average person is.

I actually have a facebook account. I hardly ever use it, but it's great for finding people when you have lost their email address. I have a few cat pictures on it, but would never put my real picture on it, or do dumb things like tell criminals when I'm away from home, etc. It's fun to see people's pictures that you knew from high school so I can see how old they look and who got fat and/or bald (because I haven't). I still say it's more of a novelty item, as I prefer real email. I certainly wouldn't invest in it. I prefer stocks that pay dividends and or actually make something that people need, like utilities and REITS. If I want to gamble I go to Atlantic City and waste $20 in the slot machines (thought I spend way more on beer and food when in Atlantic City than anything else).

I.E. - I gamble here:

NOT here:

Never had facebook, never will. Seemed to be a copy of MySpace - which got old back in the day.

Just another fad. Give it a few more years and some other/newer form of social networking will take FB off the top of the mountain.

Oh facebook is likely to make a lot of money. They have to figure out how to offer advertisers something useful. People go on there with the intent to post, or read something. They ignore all the ads, and if they do engage with an ad, it's not enough of an engagement for those advertisers to pay big money.

Internet advertising is all about numbers and return. It's very easy to see what works and what doesn't. Put a link here, and 3 hours later you can tell it increased sales by 0.03%. Something like a television ads give just random numbers with figures skewed by all kinds of noise, but internet advertising is very specific. Page views went from this to that. Purchases went from this to that.

The problem is, people simply don't engage, and no large media buyers have figured out what to do with facebook. Everyone is looking for "something" Facebook will have to let advertisers get pretty aggressive. They'll make good money, but nothing as long term as google.

jkennedy says

Oh facebook is likely to make a lot of money. They have to figure out how to offer advertisers something useful.

francophile100 says

Am I still counted as an "active" user? I should not be, but I assume I will be counted as such in their SEC disclosure.

Active users ? Monetization ?

The Nasdaq has 1-2 Billion transactions per day generating some $3-4Billion dollars a year. Yet their P/E is only 12 with Mrkt cap at $4B. They pretty much lock in their customers in the long run and have been around for a long long time.

FB is way overvalued...

jkennedy says

Oh facebook is likely to make a lot of money

I think we can all agree that Facebook will reap in a lot of cash. However, it's important to remember that this does not mean those buying Facebook stock will. Remember during the Dot Com Stock Bubble everybody knew that the Internet was the future and it was going to change everything. Everyone wanted in, and as a result stocks were highly overvalued.

The Internet wasn't a bubble, but the stock valuations of Internet related companies was. I think that Facebook is similarly over-hyped. It's IPO is supposedly going to be way bigger than Google's, and Facebook isn't nearly as important or indispensable as Google.

Lots of times though, the initial drive for stocks runs up the prices so that people buy the stock just to scalp them to other people. The risk is that your left holding the stock when the initial euphoria is over. As I'm not one to gamble, I think I'll just watch this from the sidelines.

Personally, I dont think FB will be over valued if you consider current PE and prospective growth.

They will probably show some real nice numbers going forward, at least the next year or two.

In reality, they're just one step away from becoming obsolete. People don't need them, and as they piss people off trying raise more and more money, people will slowly just walk away. I think the real problem with FB is that it's very likely to fall into irrelevance.

In reality, FB hasn't done anything new in 7 years.

They created a place where you could post quick status updates on the crap you did.
They created a place where you could comment easily on other peoples crap.
They created a place to post photos easily for commenting purposes.
They created a great way of stealing all your contacts and information to create connections between you and your "friends" so you could contact them.
They expanded their server network to handle their traffic (googles orkut failed here).

They did that all basically in year one.

Everything else has been a dud.

jkennedy says

In reality, FB hasn't done anything new in 7 years.

From an end user's point of view. But remember, Facebook makes it money by selling customer data to advertisers. They could have been doing a lot of things related to that and it would never be transparent to the Facebook user.

Facebook's product is not a social networking site. It's product is information about you. The site is just the hook to crowdsource data collection to the masses.