SevenCubed - 2:15 pm on Oct 24, 2012 (gmt 0)
There's an intangible about facebook that I just can't put my finger on to explain in words or I would. By that I mean there is something that is going to drag that company down fast and hard. And I'm not referring to the share price but that too will follow along without doubt.
Keep this in mind too; the general public, even many business people, do not understand the concept of common shares and how they work. Because of that, when the media starts circulating around dropping facebook share prices like vultures they keep it in the limelight. That attention will probably have a negative effect on users and even advertisers who don't understand that share prices are not an ultimate reflection of the potential (or lack of) within a company. That same attention might cause users and advertisers to bail out for not wanting to go down with the (perception of a) sinking ship. Share prices are simply a reflection of investor (and speculator) sentiment. They go up, they go down, they go up, they go down -- all based on what investors THINK may or may not happen in the near future -- not based on what's really unfolding within the company. Therefore if the investors cannot see for themselves what is really happening (most cannot) they just follow the market trend and do what the market is doing.
And the simple minded market is only reacting to what MZ is saying just like they didn't question the IPO price. I remember leading up to the IPO even we as a community of WW members were rolling our eyes into our heads at the suggestions of what the company was really worth. We knew it wasn't worth that. Yet the market was lead by their senselessness to the slaughterhouse.
Going back to what I was saying about an intangible about facebook -- it revolves around INTENTION, but is not limited to that. However intention in and of itself is a strong enough factor to drag that company down on its own.
I had to go look up a post by jecasc that expresses it very accurately:
On Google I can convince a hungry guy to buy a pizza when he is actively searching for something to eat. On Facebook I have to convince the guy he is hungry first before I can sell the pizza.
People on Google are actively searching for a place to go - Google is not their destination. - exactly because it is only a search engine. If I can convince them with my ad that I am the place to go I can make money and pay Google for it.
Facebook is already the destination. Facebook is the place where people wanted to go and want to stay for the time being. An ad is much less effective here.
That's why Google users are - and will stay for a long time much more valuable for advertisers - even if Facebook has 3 Billion active users. [webmasterworld.com...]
A few weeks back MZ implied that they were making progress on developing internal search -- that successfully eased the faltering share prices at the time. This time he's saying how wonderful the future of mobile looks, and the mindless minions bought into it again -- up go the shares by 8%!
The truth is that if google is struggling to maintain search dominance how much less likely is facebook to succeed at it?
As for mobile potential -- most days I go and enjoy a joltin' cuppa java at my fav café. While sitting I studying the behaviour of the folks sitting around with their electronic gadgets. Almost all of them have mobiles and almost as many are pounding away on laptop keyboards. There are many students there making use of the free wi-fi doing research I presume for homework. Occasionally they will pick up their mobile and glance at it, probably an incoming text or something. Maybe they are also looking at something posted on their facebook page, who knows. But I think mobile user intention will not grow into a gold mine. It is simply a product of convenience -- a value added gadget to complement the time away from a more useful means of connecting to the internet -- a laptop or desktop.
But if any "investor" doesn't see the writing on the wall (I made a pun) for facebook they will have nobody to blame but themselves for ignoring all the warning signs.
<<< After proof-reading this post prior to submitting it I think it's a bit fragmented in thoughts (coffee hasn't kicked in yet) so if something isn't clear just shout it out :) >>>