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Boo hoo to all the morons who bought Facebook stock May 24, 2012

Posted by fetzthechemist in Uncategorized.
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Facebook IPO, blah, blah, blah. Every news story after the fact acts as if the results were a surprise. Facebook stock being overvalued is not news! Facebook stock buyers were buying a self-driven image. “It will be the next Google!” “It will be the next Apple!” “It will be the next Amazon!”. Ummmm….no way, bozos. Those three companies actually sell a product that someone is willing to pay for. What does Facebook sell?

Google is a search engine company that not only sells a lot of ads (people are often looking for information to buy things), but sells the top spots in search results. Apple makes devices and downloads for them. Do you really think an iPod song costs Apple anywhere near $1.29? They sell millions of thse and probably get close to a dollar in profit for each one (just look at Amazon selling the corresponding mp3 downloads for 30 cents less and making money). Amazon sells ebooks, paper books, music, and everything else under the sun.

Facebook has ads, these sad stockbuyers retort. OK, all of you, how many of you have ever clicked on a Facebook ad? How many of that probable one-in-a-thousand have ever bought something from that as? Facebook ads are cheap and bring in little money. General Motors pulled their Facebook advertising last week, something like $11 million per year and they were one of Facebook’s biggest advertisers. The 900 million users of Facebook do not pay to use it. The biggest source of revenue is the games on it, the like of Zynga are Facebook’s lifeblood – but Zynga is moving off Facebook to their own websites hosting the games.

So, is Facebook a 100 billion dollar company? Get real. They are not even worth half of that. If anyone thought through this stock offering, they would have seen $10 to $15 a share AT MOST. But Facebook sold because it was not a business, it was a cool social activities place. Free meeting rooms do not get much when they pass the hat.

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Comments»

1. Rohit Sharma (@rnsharma) - June 4, 2014

Must hurt, FB is at $62.87 a share. Willing to reconsider your opinion?

fetzthechemist - June 4, 2014

They changed their business model, not trying to sell online or sell personal information. But it is a volatile stock and FB has little intrinsic value. The stock price is still dominated by image, not substance.


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