I'm thinking about buying Facebook. 

Not shares, the company.

For serious, though, it seems healthy that investors are skeptical of Wall Street hype and waiting to see how higher valuations might be justified. 

Comments

[Justin]

The last thing we need is for investors to get sucked in on hype and create a tech bubble that will eventually burst. We've been down that road. Let's stick with the conservative investing strategies.

[Sean]

it's great that facebook has a billion users, but until they can show a few revenue streams, such as google's advertising, it really is all hype.

[Account Deleted]

FB's estimated P/E is 57. Google's P/E is 18.

[Ed Cone]

It gets worse.

[Sean]

just over a year ago, goldman sachs released numbers that indicated facebook's P/E ratio to be 125. if anyone believed that or their current valuation, i have a train trestle in downtown greensboro for sale.

seriously, can someone point to how FB is possibly three times as profitable as google? what business deals do they have in place that are augmenting their failing advertising strategy?

[Thomas]

Sean -If earnings get bigger, the P/E gets smaller.

I heard the day before the IPO that P/E (at initial asking price) was over 100. Why would anyone buy?

[Sean]

der, my bad, thomas. thanks for that catch. i always seemed to have dyslexia with the business side when in the financial industry. i guess that's why i had a business analyst attached to my hip. :-)

that said, facebook being profitable long-term as currently situated seems like a huge gamble. fb advertising is a one trick pony, and it's not even the same type of philly as google ads. the vast majority of fb users are engaged in non-search/shopping scenarios when ads are displayed, as opposed to entering action or brand oriented searches when they come across ads in google. seriously, who clicks on big business fb ads?

as businesses realize they're better off investing in their social media team to engage with users who "like" them, i'd imagine fb advertising buys will be more relegated to more clickable ads, such as events and releases -- still a substantial global revenue stream, but nowhere near the ubiquitous business model they seemed to be hoping for.

i dunno. until i can see how they plan to expand the 15% of their non-advertising earnings into a number closer to 40% of the earnings pie, i'm staying far away.

[Thomas]

Zuckerberg has acknowledged that eyeballs are migrating to mobile screens and admitted that FB doesn't do mobile well. Unless they can overcome that, I think you're well advised to stay away. Facebook may look a lot like today's Myspace in 3 to 5 years (or less, what with the acceleration in the rate of change).

[Billy Jones]

Getting dumped by General Motors hasn't helped them any either.

[Bill Yaner]

There are 500 million FB users worldwide, with half that number using it every day. FB's most precious asset is the data they - and they alone - can access on each of those users.

Selling lists of user names by whatever category would violate their so called privacy policy and piss off the world. End of business. But within the bounds of what can be done legally and quietly as determined by their army of lawyers lies a whole world of growingly sophisticated data mining techniques that can produce tremendous wealth in the right hands.

I can say no more.