Facebook Inc.’s stock, which has already lost $25 billion in value since its public debut, would have to drop another 20 percent for its valuation to match other companies that do business over the Internet.
In a sign that Facebook is in trouble here is a photo of company founder Mark Zuckerberg taking money out of the ATM.
I don’t want to say the company is in trouble but their IPO gave Facebook a higher multiple than 99 percent of the Standard Poor’s 500 Index.
What they have done to immediately show increased revenue (like LinkedIn), is to start charging page owners to have their Facebook pages promoted to their fans’ newsfeeds.
Here is an example of what they are doing:
Facebook will hide updates to most fans. Yet, for $30, you can have a status into your fans’ newsfeeds.
I like this idea as a shareholder but I don’t own any shares and I hate it!
Can’t they think of any other idea?
This is why I don’t invest in companies that do not pay dividends – they do not have a long standing business and understandable business. They seem to change ideas constantly as to what they want to do.
2 Comments
Yeah I do get the sense the Facebook management was just looking to cash in while the valuation was nice and high and their underlying problems weren’t truly exposed. They must know that they’re going to be facing an uphill battle with trying to create the annual income that investors will desire. I guess they just grew too big that being bought out by Google or Microsoft was no longer as profitable an option.
There is going to be a lot of conjecture on everything fb does but a couple of comments here, coming from a guy in tech doing a startup, remembering that only 8 years fb was a startup also.
Experimentation is key to progress .. and the only way to innovate at the pace facebook has innovated (remembering less than a decade ago the concept barely existed) is to try things with users.
People seem to quick to write off the huge progress and benefit that has come with the rise of the socially aware internet (of which fb is pretty much the plumbing) when personally inconvenienced by the experimentation that goes with the territory.
Do I think fb needs to be more creative in how it creates revenue? sure – but am I happy to let them work it out by directly engaging users in the learning process, in essence enabling people to shape how the produce evolves… definitely.
This talk, from 2010, is a fascinating insight into how they work.
http://www.youtube.com/watch?v=bKZiXAFeBeY
worth a watch if you’re interested in the why that sits behind the what you end up seeing
For the record, I think fb is a long term investment for anyone who has the risk profile for that type of investment (tech/equity)