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Not a fan myself (Too old probably. My teenage kids, and older family members use it)

 

Not a shareholder, but with stock price tumbling and folks perhaps indiscriminently selling (selling just because price is down)recently I thought I would have a peak at their 10Q.

 

http://sec.gov/Archives/edgar/data/1326801/000119312512325997/d371464d10q.htm

 

Positives:

 

Have net cash of $8.4 b with 377 million shares or $22 per share but shares selling for $19 and change this am.

 

Negative- did not make any money this quarter + it looks like the employees are enriching themselves (share based compensation of $1.2 billion, significantly increased R&D expense of $700m+ that I am sure some goes to their employees/management)

 

I don t know that I like the character of the leadership, just the little bit that i have seen. Nothing concrete just a general feeling.

 

Posting because  I was surprised that it is selling for less than net cash.

 

EDIT: Sorry guys, I figured I screwed something up- forgot to add the B shares..that's 1.9billion shares or $4.42 per share.  That makes more sense

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FB is one of those spectacular investments that makes people a lot of money.  Spectacular in the sense that it operates to transfer a lot of money from Joe Retail Public to the good folks at FB and their bankers and other advisors.  FB may or may not end up being a long lasting company, but it has a long way to go until it's stock is worth looking into.

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FB is one of those spectacular investments that makes people a lot of money.  Spectacular in the sense that it operates to transfer a lot of money from Joe Retail Public to the good folks at FB and their bankers and other advisors.  FB may or may not end up being a long lasting company, but it has a long way to go until it's stock is worth looking into.

Agreed. From what I remember when I looked at their financials upon IPO, most of their profit is going straight to employee stock options. And if I recall this fact didn't look like it would change for at least a year or so. Same story with Zynga as well.

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I looked briefly at it.  They have enormous reach and if executed properly could be extremely profitable.  That said, they are probably approaching a steady state of users, so how to monetize.

 

Impossible to value.  Maybe another Google, or Msft, maybe not.

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Social networks remind me a bit of webmail back in its heyday. Microsoft paid hundreds of millions for Hotmail only to realize that it was hard to monetize because people go there to look at emails, not ads.

 

If you search for "luxury car" on google and see ads for BMW and Mercedes, that's useful to you because that's what you were looking for. But ads on the side of your social feed on facebook?

 

Some will argue that they can be very targeted because of all the info that Facebook has on you, but it still doesn't change the fact that you're not looking to buy stuff, and even if you are, there's no clear way to signal that intention like with search. Then that leaves more "branding" type of ads, but those are a lot less valuable and effective, and can easily be ignore because they're not showing something you are looking for at that moment.

 

Then they'll probably try to keep pushing further the whole "your company needs a strong presence on FB with a brand page", but how valuable is that? Good way to communicate with your customers and remind them about you, but if I'm looking for info on a BMW, will I go to BMW's FB page or to their official website? And even if I go to the FB page, will any info be there? Is the company going to re-build their whole website on a platform they don't control, or just throw you to the existing site with a link? So how much can FB charge for these brand pages?

 

Then maybe they'd decide to pull a Google and go into search and syndicated ads via an exchange, but what are the chances of success there? Even partnering with Microsoft - who has only lost billions on search and ads so far - would what FB has really be some secret sauce to take search to the next level? Is all the crap that people post on FB really the way to make search better for users or will it just clutter up results with junk? I'm sure advertisers would love better demographics info, but it's the user experience that makes web tools succeed or not.. We'll see.

 

/thinking out loud

 

I don't have a horse in this race anymore, though. I made about 25% in GOOG in a month and then sold it to buy something more undervalued... It was luck that it turned out that way, but I still believe GOOG should do well over time, though it isn't nearly as cheap now as it was at 475.

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Social networks remind me a bit of webmail back in its heyday. Microsoft paid hundreds of millions for Hotmail only to realize that it was hard to monetize because people go there to look at emails, not ads.

 

If you search for "luxury car" on google and see ads for BMW and Mercedes, that's useful to you because that's what you were looking for. But ads on the side of your social feed on facebook?

 

Some will argue that they can be very targeted because of all the info that Facebook has on you, but it still doesn't change the fact that you're not looking to buy stuff, and even if you are, there's no clear way to signal that intention like with search. Then that leaves more "branding" type of ads, but those are a lot less valuable and effective, and can easily be ignore because they're not showing something you are looking for at that moment.

 

 

This has always been my thought on the Google/FB debate.  It seems like there was consensus behind it for a while a year or so ago, but then everyone went crazy for targeting.  I still think intent is the important aspect.

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Social networks remind me a bit of webmail back in its heyday. Microsoft paid hundreds of millions for Hotmail only to realize that it was hard to monetize because people go there to look at emails, not ads.

 

If you search for "luxury car" on google and see ads for BMW and Mercedes, that's useful to you because that's what you were looking for. But ads on the side of your social feed on facebook?

 

Some will argue that they can be very targeted because of all the info that Facebook has on you, but it still doesn't change the fact that you're not looking to buy stuff, and even if you are, there's no clear way to signal that intention like with search. Then that leaves more "branding" type of ads, but those are a lot less valuable and effective, and can easily be ignore because they're not showing something you are looking for at that moment.

 

Then they'll probably try to keep pushing further the whole "your company needs a strong presence on FB with a brand page", but how valuable is that? Good way to communicate with your customers and remind them about you, but if I'm looking for info on a BMW, will I go to BMW's FB page or to their official website? And even if I go to the FB page, will any info be there? Is the company going to re-build their whole website on a platform they don't control, or just throw you to the existing site with a link? So how much can FB charge for these brand pages?

 

Then maybe they'd decide to pull a Google and go into search and syndicated ads via an exchange, but what are the chances of success there? Even partnering with Microsoft - who has only lost billions on search and ads so far - would what FB has really be some secret sauce to take search to the next level? Is all the crap that people post on FB really the way to make search better for users or will it just clutter up results with junk? I'm sure advertisers would love better demographics info, but it's the user experience that makes web tools succeed or not.. We'll see.

 

/thinking out loud

 

I don't have a horse in this race anymore, though. I made about 25% in GOOG in a month and then sold it to buy something more undervalue...

 

See, I'm a rock climber but I never have to search on Google for anything regarding rock climbing. However, its listed in my FB profile. When a new gym opened up in my neighborhood, I saw an ad from Facebook and clicked on it.

 

I'm also a Pink Floyd fan but I don't ever search for anything related to Pink Floyd on Google. Don't have a need to. When Roger Waters was playing in my town, I learned about it through an FB ad. I bought tickets by clicking on the link.

 

In both cases, my intent was latent.

 

There's a reason why Google is betting the farm on Google+. If they felt it was not monetizable, they wouldn't be diluting their search results with links from Google+ and risking their core business.

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See, I'm a rock climber but I never have to search on Google for anything regarding rock climbing. However, its listed in my FB profile. When a new gym opened up in my neighborhood, I saw an ad from Facebook and clicked on it.

 

I'm also a Pink Floyd fan but I don't ever search for anything related to Pink Floyd on Google. Don't have a need to. When Roger Waters was playing in my town, I learned about it through an FB ad. I bought tickets by clicking on the link.

 

In both cases, my intent was latent.

 

There's a reason why Google is betting the farm on Google+. If they felt it was not monetizable, they wouldn't be diluting their search results with links from Google+ and risking their core business.

 

I never said it's not monetizable, just that it's a lot harder. Neither did I say that demographic info isn't valuable (hence Google+), just that it's only one piece of a very complex puzzle.

 

Your anecdotal evidence can be countered with other anecdotal evidence (all I see is spammy ads that remind me of Geocities-era banners, and big ad buyers have said recently that they were not satisfied with FB ads). What will matter in the end is how much money FB makes. Maybe they'll figure it out and hit jackpot, we'll see.

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See, I'm a rock climber but I never have to search on Google for anything regarding rock climbing. However, its listed in my FB profile. When a new gym opened up in my neighborhood, I saw an ad from Facebook and clicked on it.

 

I'm also a Pink Floyd fan but I don't ever search for anything related to Pink Floyd on Google. Don't have a need to. When Roger Waters was playing in my town, I learned about it through an FB ad. I bought tickets by clicking on the link.

 

In both cases, my intent was latent.

 

There's a reason why Google is betting the farm on Google+. If they felt it was not monetizable, they wouldn't be diluting their search results with links from Google+ and risking their core business.

 

I never said it's not monetizable, just that it's a lot harder. Neither did I say that demographic info isn't valuable (hence Google+), just that it's only one piece of a very complex puzzle.

 

Your anecdotal evidence can be countered with other anecdotal evidence (all I see is spammy ads that remind me of Geocities-era banners, and big ad buyers have said recently that they were not satisfied with FB ads). What will matter in the end is how much money FB makes. Maybe they'll figure it out and hit jackpot, we'll see.

 

http://www.inc.com/issie-lapowsky/facebook-ad-campaign-actually-works.html

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No doubt Facebook's PR people can find a bunch of success stories and point them out to journalists for their PR counter-attack to the bad publicity that was recently generated, but it doesn't change the fundamental difference between social network ads and search ads. What will matter in the end is dollars, and we'll have to wait and see for those.

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No doubt Facebook's PR people can find a bunch of success stories and point them out to journalists for their PR counter-attack to the bad publicity that was recently generated, but it doesn't change the fundamental difference between social network ads and search ads. What will matter in the end is dollars, and we'll have to wait and see for those.

 

If you read the article, that what they saying - social ads are different from search ads.

 

 

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I'm going to suggest that Facebook's ad potential is probably higher than the current capabilities of AdSense, which are a huge moneymaker for Google.  Facebook has the technology, data, and reach to push out ads that are better than Google's AdSense ads because they will be user-oriented instead of content-oriented.  My belief is that media sites are far more likely to generate clicks from Facebook driven ads because the content of those sites is generally uncorrelated with "intent".  Like how candied cereal commercials are aired during children's cartoons.  Nothing in the context of a cartoon indicates that Froot Loops should be advertised (unless the cartoon stars an enthusiastic toucan), but everyone knows that it's a really good idea.

 

Now I have noticed that many AdSense ads are starting to "follow me around".  e.g. I was evaluating some software and for the next there days I kept seeing banner ads for that software, even here on CoBF.  Pretty cool.  A little creepy but I have accepted it as a fact of the future. 

 

No position in Facebook but I love when a stock gets hammered for this reason.  I might dip my toe in if it gets really ugly.

 

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I'm going to suggest that Facebook's ad potential is probably higher than the current capabilities of AdSense, which are a huge moneymaker for Google.  Facebook has the technology, data, and reach to push out ads that are better than Google's AdSense ads because they will be user-oriented instead of content-oriented.  My belief is that media sites are far more likely to generate clicks from Facebook driven ads because the content of those sites is generally uncorrelated with "intent".  Like how candied cereal commercials are aired during children's cartoons.  Nothing in the context of a cartoon indicates that Froot Loops should be advertised (unless the cartoon stars an enthusiastic toucan), but everyone knows that it's a really good idea.

 

Now I have noticed that many AdSense ads are starting to "follow me around".  e.g. I was evaluating some software and for the next there days I kept seeing banner ads for that software, even here on CoBF.  Pretty cool.  A little creepy but I have accepted it as a fact of the future. 

 

No position in Facebook but I love when a stock gets hammered for this reason.  I might dip my toe in if it gets really ugly.

 

That's pretty much what I think too. Facebook ads will be closer to Adsense than search ads. While Google uses content on the site where you are plus cookies and google profiles to target those ads, Facebook will use its profile info + social graph + cookies from facebook connect and syndicated like buttons.

 

But IMO, ceteris paribus, both those types of ads provide less value to the user and advertiser than search ads (or adsense ads on more obviously commercial/niche websites, which can attract more 'primed' potential buyers). I never said facebook can't make money or that its ads don't have value, just that they're harder to monetize, in the same way that CTR and conversion on adsense must be lower than on search ads. Facebook has ginormous reach, so they'll obviously make lots of money even if they get less per ad, but how much money that will be, how fast income will grow, and how satisfied its customers will be from their ad buys remains to be seen.

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If you read the article, that what they saying - social ads are different from search ads.

 

Which is what I've been saying all along.

 

Then I assume Facebook PR got to you too  ;)

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http://aswathdamodaran.blogspot.com/2012/08/facebook-face-plant-time-to-friend.html

 

In my first post on Facebook this year, right after Facebook filed its financials (S1) with the SEC, I valued Facebook at $28/share (or $70 billion).

With these changes,  my intrinsic value for Facebook with the updated information is $23.94, a drop of just over 10% from my May 2012 estimate.

My conclusion is that Facebook is not quite at the threshold of being a buy yet, but it is getting close. I have a limit buy order for the stock at a price of $18.

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Valuation aside, the parade of share lock-up expirations through the end of the year will probably keep FB down for a while.  I may start looking at it if it's in the mid-low teens in late December (near the tail-end of the lock-up schedule).

 

Although, with the imbalanced share structure and a management team that seems to resent going/being public and has repeatedly expressed the interest in user experience over profitability, it may not be worth owning at any price.

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I'm going to suggest that Facebook's ad potential is probably higher than the current capabilities of AdSense, which are a huge moneymaker for Google.  Facebook has the technology, data, and reach to push out ads that are better than Google's AdSense ads because they will be user-oriented instead of content-oriented.  My belief is that media sites are far more likely to generate clicks from Facebook driven ads because the content of those sites is generally uncorrelated with "intent".  Like how candied cereal commercials are aired during children's cartoons.  Nothing in the context of a cartoon indicates that Froot Loops should be advertised (unless the cartoon stars an enthusiastic toucan), but everyone knows that it's a really good idea.

 

Now I have noticed that many AdSense ads are starting to "follow me around".  e.g. I was evaluating some software and for the next there days I kept seeing banner ads for that software, even here on CoBF.  Pretty cool.  A little creepy but I have accepted it as a fact of the future. 

 

No position in Facebook but I love when a stock gets hammered for this reason.  I might dip my toe in if it gets really ugly.

 

That's pretty much what I think too. Facebook ads will be closer to Adsense than search ads. While Google uses content on the site where you are plus cookies and google profiles to target those ads, Facebook will use its profile info + social graph + cookies from facebook connect and syndicated like buttons.

 

But IMO, ceteris paribus, both those types of ads provide less value to the user and advertiser than search ads (or adsense ads on more obviously commercial/niche websites, which can attract more 'primed' potential buyers). I never said facebook can't make money or that its ads don't have value, just that they're harder to monetize, in the same way that CTR and conversion on adsense must be lower than on search ads. Facebook has ginormous reach, so they'll obviously make lots of money even if they get less per ad, but how much money that will be, how fast income will grow, and how satisfied its customers will be from their ad buys remains to be seen.

 

http://techcrunch.com/2012/08/30/party-like-its-1990-some-ctrs-on-facebook-sponsored-results-ads-exceeding-3/

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I find the focus on user experience vs profitability a big draw actually.  If FB loses their user base they won't be able to add much value, so in my mind that is the moat and they must do everything to protect it... I don't see anything wrong with sacrificing short term profits to keep their position strong.

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