Facebook...
Stick8267
Posts: 154
just watched The Social Network. I thought it was a good film but left me with a question.
I can understand Facebook having a value as a company, although £25 billion seemed steep, but where is the income? The shareholders are worth a fortune but how do they gain from it unless they sell their shares? It doesn't have a sellable product and doesn't have advertising.
Any bright financial types able to explain?
I can understand Facebook having a value as a company, although £25 billion seemed steep, but where is the income? The shareholders are worth a fortune but how do they gain from it unless they sell their shares? It doesn't have a sellable product and doesn't have advertising.
Any bright financial types able to explain?
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app makers pay them for user data maybe?0
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ermmm... facebook does have adverts..0
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many, many advertsJake the Snake '06
http://www.bikeradar.com/forum/viewtopic.php?t=12793531
https://www.strava.com/athletes/12489700 -
targeted adverts to you.0
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Captive audience of umpteen million addicts with data capture ability to enable advertisers to deliver targeted content.
Facebook itself, as a platform, is worthless - it is the data it gathers (and can gather, and has yet to gather) which is the goldmine.
It's worth considering that this value is temporary, and Facebook must constantly evolve to keep it - look at Myspace and how quickly that dropped out of favour with the masses. It's value slumped overnight.0 -
Advertising value online is calculated by using the time a single persion spends on a website on average, and how targeted you can make the advert.
People spend ALOT of time on facebook, and release a lot of info about their likes and dislikes so in terms of advertising it is worth a fair bit.
Though they are trying to monetise it further with credits which you buy to spend on a digital film rental for example. IMO I don't think facebook has even scratched the surface of what they could achieve with all the data they posses.0 -
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Stick8267 wrote:just watched The Social Network. I thought it was a good film but left me with a question.
I can understand Facebook having a value as a company, although £25 billion seemed steep, but where is the income? The shareholders are worth a fortune but how do they gain from it unless they sell their shares? It doesn't have a sellable product and doesn't have advertising.
Any bright financial types able to explain?
The film failed to mention that adverts eventually became part of facebook.
What's more, with the information facebook has on you, they can specialise advertising, and get good information on how the advertising is going, which makes it plenty more valuable.
The whole 'like' or 'dislike' adverts is part of it.
It's not just the exposure, it's the information people seem to be willing to give up to facebook which is so valuable.0 -
Internet based entities have a tendency to be over-valued or have a value which can be entirely contrary to business fundamentals (revenue/profit/liabilities). For example, Groupon (that online voucher thing) are reportedly worth $750 million should they issue shares, however they have consistently made 7 figure losses throughout their short existence.
The internet holds so much potential hence why investors get really excited but it's also the most dynamic, fluid business environment out there. So what is valuable today may be worthless next year.
The actually social network platform has little or no value. But facebook isn't really just a social network. It is an advertising platform and a seller of information (directly of indirectly). Advertising space and information is valuable (people will buy it/pay for it).
Facebook has such a high valuation only for as long as the advertisers see it as the best place to invest their money. As soon as something disrupts that, be it a more popular social network, a more effective advertising space, less money to spend advertising, the apparent value of facebook will disappear into thin air to a greater or lesser extent.
Like above, Myspace is a good example. The DotCom bubble serves as a potent reminder too...0 -
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AndyRubio wrote:Do people still actually use Facebook?
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For investors the internet/social networking, is probably tremendously exciting, as it is (still relatively) new. From diddly squat start up capital, some coding knowledge and a good idea, you can put together something that in a few years is used by a large %age of the population of the world.
I can't think of any other industry where you can go from independent start up to internationally known company in such a short amount of time.
Rapid growth, international penetration, people giving out plenty of personal information, there should be some solid opportunities to make money using advertising. However, with the extreme amount of hype surrounding them , they are consistently over valued, and furthermore, as myspace shows, the market is extremely volatile.
Having said that, I have trouble seeing a social network overtake facebook for a while. MySpace was never as popular as FB, it was really just school kids and bands (IME). FB has everyone on it, and whilst internet savvy geeks might be happy to jump on any new social network, the bulk of the population is happy to sit on FB.You live and learn. At any rate, you live0 -
The advertising model is good. As they know so much about you the advertiser can pinpoint exactly who they want to see their advert. Really very powerful.
You could say: I want people who 'like' cycling and live in SW London and then just pay to advertise directly to them.
.... except, who has ever looked at the adverts? With most phone apps they don't exist anyway!
I get the feeling 'peak' facebook has already happened and it will end up being worth slightly more than MySpace.
Google look stronger, but it's still very fickle. Mess around too much and you could get wiped out nearly as quickly as you were created.
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Google's algorithms are not what they were.
It used to be AMAZING at filtering out spam websites. They've let that slip recently.0 -
Rick Chasey wrote:Google's algorithms are not what they were.
It used to be AMAZING at filtering out spam websites. They've let that slip recently.
I've noticed this too. They'll go the way of Altivasta and Hotbot if they don't sort out a better spam filter.0 -
I still use it occasionally but access it through my phone app so as pointed out I don't see any adverts.0
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It'll be interesting to see how they go.
If they opt for a public offering (stock market) then they'll be heading into a risky realm. IMO they don't really have much of a sustainable model with regards to development and diversification. The options they do have are already heated and competitive markets (like search engines) or things that will not bear any revenue at all (like instant messaging).
It also depends on what the people in charge want to do. If they just want to get rich quick then they will issue shares, the hype will see the shares rocket and they will pay themselves huge salaries or take huge dividends and it will eventually creak to a halt, stagnate and maybe disappear. Mark Zuckerburg will live the rest of his life very comfortably though.
If they spend the their revenues/profits wisely they can innovate/develop/divesify well, afterall they will have an absolute pile of cash. But they will have to have strong strategy with a commitment to re-investing that pile of cash. Some risks will be taken along the way, but with that kind of cash you can spread the risk better than others.
A DotCom bubble stock that survived and has done well is Amazon. They could have announced some serious profits this year (and got rich in the short run with a big boost in their share price) but instead shoved a hefty chunk back into their development projects. The Kindle for example is a huge success (but was a HUGE risk). They have designs on digital music too. It can be done.
I think commitment is the key word. The Kindle for example could easily be a really sh1t product that no-one would want to use, but they went the whole hog and made sure it was exactly what people wanted.0 -
AndyRubio wrote:Do people still actually use Facebook?
Am currently reading a book called (without irony!) Wikinomics, a 2006 edition in which MySpace gets a fanfare in every other chapter and Facebook warrants hardly a mention. Underlines your point nicely!"Consider the grebe..."0 -
You can't compare Amazon to FB or any other social networking site. Amazon retail consumer goods at attractive prices because they don't have High Street overheads, and they have developed a very efficient warehousing and distribution network. It would be very difficult for a newcomer to grab a sizeable chunk of their business. Facebook could disappear overnight as soon as someone comes up with a more attractive way of allowing people to interact. Look at Friends Reunited, an internet sensation less than a decade ago, now hardly anyone goes near it.EKIMIKE wrote:
A DotCom bubble stock that survived and has done well is Amazon. They could have announced some serious profits this year (and got rich in the short run with a big boost in their share price) but instead shoved a hefty chunk back into their development projects. The Kindle for example is a huge success (but was a HUGE risk). They have designs on digital music too. It can be done.0 -
ITV were totally mugged off paying what they did for FriendsReunited. Over a hundred million wasn't it?
Talking about Amazon and market share...they certainly seem to have put the squeeze on Play pretty effectively.0 -
[quote="verylonglegs"]ITV were totally mugged off paying what they did for FriendsReunited. Over a hundred million wasn't it?
Talking about Amazon and market share...they certainly seem to have put the squeeze on Play pretty effectively.[/quote]
125 million I believe, within a short time it had slumped in value to a mere 25 million and probably even less now.0
