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Forget $3B In Revenue: Things "Don't Look Good" For Facebook

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Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#71

Post by andyakb »

yoklov wrote: post #70
jonnathanson wrote: post #66

Earlier quoted context omitted.

I tend to agree. Call me crazy, call me naive, call me idiotic, but I just don't see any actual problems for Facebook until/unless a serious competitor for its userbase emerges. Pinterest isn't (yet?) that competitor, inasmuch as it's not currently a substitute for Facebook; they seem to cohabitate pretty well. Other interest-based networks aren't competitors for the same reason. Google+ doesn't seem to be making muc…

I might be wrong, but I don't think the question is "will Facebook be overturned by another social network?" so much as it is "are social networks even profitable?"

facebook made $1B profit last year

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#72

Post by yoklov »

greek4all wrote: post #59
vamsee wrote: post #58

Earlier quoted context omitted.

Et tu, Brutus?

actually it is "Kai su teknon?" "and you child?"

He's quoting Shakespeare.

As far as a historical account is concerned, you're more correct, but not entirely so. Suetonius mentions that some claim Julius Caesar uttered those words as he died, however his ultimate conclusion was that Caesar, in fact, uttered nothing in death. Plutarch, the other relavant historical account of what happened, came to the same conclusion.

I'd have to say that they're probably right, or are at least in a better position to say what happened than us ;)

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#73

Post by yoklov »

andyakb wrote: post #71
yoklov wrote: post #70

Earlier quoted context omitted.

I might be wrong, but I don't think the question is "will Facebook be overturned by another social network?" so much as it is "are social networks even profitable?"

facebook made $1B profit last year

Right, but is that sustainable?

I don't claim to know nearly enough about economics to even have an opinion on this subject, I'm just saying that I thought the question the article was asking was more about the economic value of Facebook (and, by extension, social networks, though, this extension may be pushing it), than it was about whether or not some competitor would be able to "dethrone Facebook", as it were.

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#74

Post by robryan »

dchuk wrote: post #60
pron wrote: post #56

Earlier quoted context omitted.

Yeah, but where will those ads appear? I have absolutely no data on this, but it seems people are spending less and less of their web time on "the open web", and more of it on medium-to-huge websites, and those usually sell their own ads directly. Facebook will succeed at what you're suggesting only if their targeting proves so effective that medium-sized websites (say the big blogs and online magazines/news sites) c…

They'll appear anywhere you see a site currently running adsense ads. There's tens of millions of sites running those ads, there is far from a shortage of publishers for a new advertising network.

Yeah, people are crying out for an alternative to adsense but can't get anything near it due to the amount of information Google has to target ads and the inventory size. Facebook is well placed to offer as good returns with even better targeting. Just look at the amount of targeting options you get on Facebook now, I'd take those any day to what adsense gives.

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#75

Post by robryan »

yoklov wrote: post #73
andyakb wrote: post #71

Earlier quoted context omitted.

facebook made $1B profit last year

Right, but is that sustainable? I don't claim to know nearly enough about economics to even have an opinion on this subject, I'm just saying that I thought the question the article was asking was more about the economic value of Facebook (and, by extension, social networks, though, this extension may be pushing it), than it was about whether or not some competitor would be able to "dethrone Facebook", as it were.

As long as they hold onto their user base, that would be on the low end of what you could expect from them in terms of revenue per user. They are trending towards better targeted somewhat more invasive ads. Virtual currency hasn't really got going yet and as mentioned above people expect them to eventually offer something similar to adsense which would have a high chance of being successful because I think they hold the edge of Google in targeting data.

Of course pushing for more profit could turn off users. Google+ though is showing how hard it is right now though to make a significant dent as an opposing social network.

As long as Facebook don't do anything stupid I find it hard to see how they will be beaten with a similar model. It is more likely that something else will be built which changes the whole social networking paradigm and makes Facebook less relevant.

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#76

Post by Eliezer »

pron wrote: post #45
pg wrote: post #12

If the worst news you can find about Facebook is a few rumors that they might miss a revenue projection, a prediction that their ad revenue growth rate will decrease from its current 60% (note: ads are not the only way FB can make money), and a random class action lawsuit, then Facebook's prospects look about as good as any company's ever get. This amount of badness is background radiation. You could scrape together…

But the story here isn't about Facebook's success; it's about their valuation. And valuations matter a lot. The entire US economy collapsed when house prices simply failed to meet growth expectations. Banks loan money backed by (overvalued) equity, and so the entire economy is in effect backed by predictions of future earnings. I've said it here before, but I think many of the tech and app companies are grossly overv…

Are you short these companies, then? Or are you buying puts?

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#77

Post by ChuckMcM »

viscanti wrote: post #39
ChuckMcM wrote: post #16

Earlier quoted context omitted.

That was my response as well, so they generate a slightly less ginomous net revenue and that is a problem how exactly. Looking at worst case numbers it looks like Facebook will be close to 'accumulating cash' mode at the outset. That is a pretty good thing. Now it would be nice to get some more visibility into their execution against advertising system changes but this reads more like a 'place' piece where the author…

The biggest reason Facebook has a 100 Billion valuation is because people expect ad revenue to grow rapidly. If there are signs that's slowing down now, before they even go public, it has a huge impact on their valuation. 100 Billion is a very generous valuation, even if you expect Facebook to have tremendous growth, it's an outrageous valuation if you expect them to stay the same (or shrink).

Well if they do manage to do 5B$ revenue this year 100B would be a 20x multiplier on their revenue. Seems in line with other tech companies. But we'll have to wait until they start pushing out those quarterly reports to be sure.

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#78

Post by perlgeek »

ary wrote: post #11
kposehn wrote: post #4

I'm kind of smelling some negative press push here about the IPO. A lot of the stuff doesn't seem to add up - despite supposedly solid leaks about documents, etc. What this might be an indicator of is a dedicated effort to push the stock price post-IPO lower so that various traders/funds can make a nice chunk of change off a rebound post-earnings. I'm fairly skeptical of this sort of conclusion - especially about sup…

Since your evidence is anecdotal I'll point out that there have been a number of "unhappy ending" stories regarding Facebook advertising on the front page of HN over the last year and a half. Perhaps your niche works well with their offerings, but it seems like you're the exception and not the rule.

Without wanting to support one side or the other, I'd like to point out that the "unhappy ending" stories are likewise anecdotal.

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#79

Post by lmm »

gph wrote: post #25

It's always amazed me that a company's outlook can look bad even though they're profit/revenue is growing, just because said growth isn't as big as it was in the past. I can sort of see why from an economics perspective, the stock price is based on profit growth projections and if those projections don't hold up the price will naturally drop. But it still seems crazy that we continually expect and pressure our public…

See http://www.forbes.com/sites/stevedenning/2011/11/28/maximizi... , which featured here a month or two ago.

Re: Forget $3B In Revenue: Things "Don't Look Good" For Facebook

#80

Post by pron »

Eliezer wrote: post #76
pron wrote: post #45

Earlier quoted context omitted.

But the story here isn't about Facebook's success; it's about their valuation. And valuations matter a lot. The entire US economy collapsed when house prices simply failed to meet growth expectations. Banks loan money backed by (overvalued) equity, and so the entire economy is in effect backed by predictions of future earnings. I've said it here before, but I think many of the tech and app companies are grossly overv…

Are you short these companies, then? Or are you buying puts?

I'd short many of them if I had the cash.
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