Facebook Value?

[MikeyK]

I'm a technology guy but I'm completely stumped on how companies like Facebook and Twitter are valued in the billions of dollars. I know they collect personal information that is valuable to marketers but these sites are free and aside from basic advertisements they don't have any source of revenue. Why are these companies valued in the multi billions?

 

[gunslingingbird]

Advertising. If you know that your ad is gonna be seen by shitloads of millions of people you'll pay more than if it'll only be seen by 200. Considering the scores of mindless drones addicted to facey spaceys, advertisers will definitely pay a premium to have their ads seen by so many people. Also, keep in mind that many of the people who see the ads will also click on them, which I'm sure raises the value of the site.

 

[MikeyK]

Advertising. If you know that your ad is gonna be seen by shitloads of millions of people you'll pay more than if it'll only be seen by 200. Considering the scores of mindless drones addicted to facey spaceys, advertisers will definitely pay a premium to have their ads seen by so many people. Also, keep in mind that many of the people who see the ads will also click on them, which I'm sure raises the value of the site.

So it is all based on the advertising? Facebook was valued in the billions well before they even started placing ads. That would make me think it is all based on speculation.

 

[rayman53x]

that was back when it was still in bata though, before they knew how to mainstream it

 

[Roald]

Imagine what you can do with 100's of millions of users

Edit: here is an interesting read http://online.wsj.com/article/SB10001424052702304584404576442950773361780.html

 

[Rey C.]

So it is all based on the advertising? Facebook was valued in the billions well before they even started placing ads. That would make me think it is all based on speculation.

It's PURE speculation, IMO. For a company that MIGHT earn $2 billion this year to be valued at $70-100 billion is utterly ridiculous. Put another way, Apple earns more in about a week than Facebook earns in an entire year. And Apple is currently valued at $370 billion, on a price earnings ratio of about 16. Even if you said Facebook is growing faster than Apple (which I don't know that its revenue or earnings is) and gave Facebook a 20 P/E ratio, that still only gets you to it being a $40 billion company. When a company that doesn't make a product, just a (fad, IMO) service, gets a P/E of 35-50, I think that's completely crazy. But I won't short it when it goes public. Even though I think it'll eventually come back down to earth, if it gets a $100 billion valuation when it goes public, the suckers and Facebook fanbois might drive it higher for awhile.

 

[MikeyK]

It's PURE speculation, IMO. For a company that MIGHT earn $2 billion this year to be valued at $70-100 billion is utterly ridiculous. Put another way, Apple earns more in about a week than Facebook earns in an entire year. And Apple is currently valued at $370 billion, on a price earnings ratio of about 16. Even if you said Facebook is growing faster than Apple (which I don't know that its revenue or earnings is) and gave Facebook a 20 P/E ratio, that still only gets you to it being a $40 billion company. When a company that doesn't make a product, just a (fad, IMO) service, gets a P/E of 35-50, I think that's completely crazy. But I won't short it when it goes public. Even though I think it'll eventually come back down to earth, if it gets a $100 billion valuation when it goes public, the suckers and Facebook fanbois might drive it higher for awhile.

I don't think facebook will last more than a few more years though. Sure it will still be around but the value of the company will take a massive dive. People will move to the next hip thing and facebook will be left in the dust just like myspace was.

 

[lurkingdirk]

I don't think facebook will last more than a few more years though. Sure it will still be around but the value of the company will take a massive dive. People will move to the next hip thing and facebook will be left in the dust just like myspace was.

Facebook has already been around for many years, and it gains more users every day.

What makes you think it will not last? All signs point to the opposite.

 

[Rey C.]

I don't think facebook will last more than a few more years though. Sure it will still be around but the value of the company will take a massive dive. People will move to the next hip thing and facebook will be left in the dust just like myspace was.

Maybe it's because I just don't buy into the Facebook concept, but I agree with you. We've seen Myspace come & go, Friendster come & go... and I just don't see the attraction of Facebook longer term. If I'm wrong, I'm wrong - wouldn't be the first time. But I think it's a fad. It's a popular fad, but still a fad, IMO. They're already losing active subscribers in North America. And in China, they have their own version of it. But for those who are anxious to snap up the IPO, best of luck to ya! Lil Mark Suckerberg won't be getting any of my money, I do know that much.

Though if it comes out at a $100 billion market cap, it'll be more tempting as a short than having Jennifer Aniston laying on my bed screaming, "this dildo ain't gonna cut it... I need you!!!" And that's pretty damn tempting!

 

[Njosnavelin]

You forget that facebook has a incredible amount of information on users, Personal information that can be used for future products...They have people's dislikes and likes on it. Plus I'd say it be of huge interest to the intelligence community and would not be surprised if in later years there is a data protection act scandel involved with it.

 

[MikeyK]

Facebook has already been around for many years, and it gains more users every day.

What makes you think it will not last? All signs point to the opposite.

Been around for many years? It was founded in 2004 and didn't gain popularity till just a few years ago. It has not been around for many years.

What makes me think it won't last? Ever hear of myspace? Or friendster? Both were popular social networking sites that came before facebook. They are both pretty much dead now.

 

[Njosnavelin]

Anything that breaks the third wall will pawn facebook.....Especially with this augmented reality shit about now.....Already there is open source java web design software with a nice interface to help web masters change content....Joomla or whatever it's called....Whoever brings such choices to the end user then throw in augmented reality where you can see your magical page on a billboard or some mad surreal shit like that.

That is who is going to sink facebook.

 

[lurkingdirk]

Been around for many years? It was founded in 2004 and didn't gain popularity till just a few years ago. It has not been around for many years.

What makes me think it won't last? Ever hear of myspace? Or friendster? Both were popular social networking sites that came before facebook. They are both pretty much dead now.

It gained popularity by around 2007. Four years in the lead is huge in this industry.

Also, it has 750 MILLION users. No other social networking site has done that. It simply will not go away quickly with that many users. I'm well aware that MySpace took a big dump in a huge hurry, but FaceBook has outstripped every aspect of MySpace.

Facebook will be around for decades.

:2 cents:

 

[MikeyK]

It gained popularity by around 2007. Four years in the lead is huge in this industry.

First of all no it isn't. Four years does not create a dynasty in any industry.

Also, it has 750 MILLION users. No other social networking site has done that. It simply will not go away quickly with that many users. I'm well aware that MySpace took a big dump in a huge hurry, but FaceBook has outstripped every aspect of MySpace.

There is no way to actually verify how many real members any online service has. They can be fudged without any real way to check the claims. I don't buy for a second facebook has that many members. This goes way back to the online dating sites that would regularly create false profiles.

Facebook will be around for decades.
:2 cents:

L O L. That is just dumb to say. Decades. Please.

 

[Rey C.]

You forget that facebook has a incredible amount of information on users, Personal information that can be used for future products...They have people's dislikes and likes on it. Plus I'd say it be of huge interest to the intelligence community and would not be surprised if in later years there is a data protection act scandel involved with it.

This is true. And I think Dirk has made some good points too. But my question is, what is it worth? If Apple is worth 16 times earnings, Google is worth 24 times earnings and Oracle is worth 19 times earnings, I just can't see that Facebook is worth 50 times earnings. That, to me, makes no sense whatsoever. It's worth something, but not 50 times earnings. And that's why I think it's a speculative play right now (or when it finally goes public).

 

[lurkingdirk]

First of all no it isn't. Four years does not create a dynasty in any industry.


There is no way to actually verify how many real members any online service has. They can be fudged without any real way to check the claims. I don't buy for a second facebook has that many members. This goes way back to the online dating sites that would regularly create false profiles.



L O L. That is just dumb to say. Decades. Please.

Ummmm. okay? I guess you win? Clearly FaceBook has no value, doesn't have very many members, and won't last very long. Everything is obviously pointing in that direction. You really have a handle on things. Good for you, you really put me in my place.

Now, let's have a discussion about powdered sugar. I have strong feelings on that subject.

 

[Njosnavelin]

This is true. And I think Dirk has made some good points too. But my question is, what is it worth? If Apple is worth 16 times earnings, Google is worth 24 times earnings and Oracle is worth 19 times earnings, I just can't see that Facebook is worth 50 times earnings. That, to me, makes no sense whatsoever. It's worth something, but not 50 times earnings. And that's why I think it's a speculative play right now (or when it finally goes public).

I agree if I was investing I would be far more interested in an actual product like apple products....Something physical....Facebook would be serious bubble stock....Up and down like a fucking yo yo

 

[MikeyK]

Ummmm. okay? I guess you win? Clearly FaceBook has no value, doesn't have very many members, and won't last very long. Everything is obviously pointing in that direction. You really have a handle on things. Good for you, you really put me in my place.

Now, let's have a discussion about powdered sugar. I have strong feelings on that subject.

Never said it didn't have members or that it was worthless. However you did make the asinine statement that it would be around for decades. LOL. Based on what? That it has been popular for 4 years?

 

[Roald]

anyone comparing FB to Myspace is being silly.

 

[gunslingingbird]

anyone comparing FB to Myspace is being silly.

What's the difference? :dunno: