Facebook IPO-The Grand Illusion


Am I the only person trying to understand where the insane value of Facebook comes from?  Last year the company had revenues of 3.7 billion dollars.  This year it should top 4 billion dollars.  But how does that equate to the company being worth 100 billion dollars?  What kind of kooky math is that?  And revenue by the way doesn’t equate to profits.  I fully comprehend that a billion people belong to this social media family but 100 billion dollars?  Apple’s worth comes from selling IPads and laptops around the world.  Apple takes in to account all of the revenues, margins, costs etc. and it’s left with a bottom line.  But Facebook?  Other than advertising, where are the revenues being generated?   No one pays to belong.   Why would anyone want to invest in advertising, especially in today’s world?   Is it the strong hope, belief, that advertisers will keep this going?  I fully comprehend the size and scope of what Facebook has become.  But what if it becomes blaze in the next couple of years?   I can actually hold my Ipad in my hand.  Disney makes movies and owns theme parks.  Banks loan money and charge interest.  How does Facebook fit in here?  In some way it’s an illusion.  If you buy in to it and believe, you’re hooked.  But nothing changes faster than technology and social media.  Does anyone remember My Space?  I am completely impressed by Zuckerberg because he stands to become one of the richest men on the planet in a few days which makes him and his inner circle smarter than anyone has the right to be.   The bottom line is if Facebook were to falter in the next few years, Zuckerberg will be sitting pretty regardless.  Just something to think about.

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