All this gets back to trying to place a valuation upon this behemoth. Facebook is likely to come to the market as a profitable company which is allot to be said compared to the recent string of Internet and social media company IPO's that have it the street. Our piece [March 4, 2012 Is LinkedIn Fenced In? What of Other Recent IPO's] focused on just that and the sky high valuations afforded to these companies with little or no earnings. Just because you have a lot of eyeballs to your site doesn't mean you can turn those viewers in revenue or profitability.
Via Barry's WP column
- I made a surprising discovery about Facebook: It has far fewer “active” users than it claims. I learned this from a note buried deep in the company’s S1 — the IPO document it filed with the SEC in order to go public. Based on its S1, the social-networking giant’s value is probably much less than most investors seem to think.
- On Feb. 3, the column used Facebook’s SEC data to show how fast the firm was growing. FB was becoming a “daily habit for more users,” and the numbers from the IPO filing were extraordinary: 845 million Monthly Active Users and 483 million Daily Active Users.
- “Daily Active Users (DAUs). We define a daily active user as a registered Facebook user who logged in and visited Facebook through our Web site or a mobile device, or took an action to share content or activity with his or her Facebook friends or connections via a third-party Web site that is integrated with Facebook, on a given day. We view DAUs, and DAUs as a percentage of MAUs, as measures of user engagement.”
- As huge as those MAU/DAU numbers were, I wondered how this detail might affect revenue. The Facebook metrics for annual revenue per user were stunningly modest: Facebook picks up $5 per user each year. Compare that to Google, which garners more than $30 per user per year. Netflix takes in closer to $144. Is this why Facebook’s annual revenues are so low compared to its 850 million user base?
- Why does this user-behavior metric matter? Consider what it means in terms of how “daily users” will generate revenue and profits. If all users do is click a “Like” button, but never make it to Facebook.com, they cannot be “monetized.” They cannot be marketed to. They do not see any advertising. They cannot be sold any goods or services. They take advantage of FB’s extensive infrastructure to tell their FB friends (who may or may not see what they did) that they liked something online. That’s all that happens.
- Consider what happened when MySpace tried to increase profits from users. With lots of pressure to drive revenue, they doubled the ads on the site. As they tried to monetize users, the site became ad-congested, a real eyesore. Users left in droves. This is precisely my point I made above, users do not equal revenue or profit
- What I learned from Facebook’s filing was that they have 161 million active users who actually go to Facebook.com each month. That’s not shabby — but it’s a far cry from the MAU claims of 850 million. That definition of active users is probably overstated by a factor of 500 percent. I suspect that the $100 billion valuation may be overstated by nearly as much.
People who take linkedin and facebook seriously deserve to suffer serious career damage. Social networks are bully networks for social retards. If a bully decides to complain, the social networks paic and censor you but if you fight back, they automatically get bullied themselves. They are brought to you by aghadhimmics whose patron saint was Walt Whitman, the guy who only had sex with himself and believed in the Gnostic Gospels. Those who use lint tin and futz book are narcissist masochist clowns governed by affectation. Is a vulture capitalist who only invests in firms which appear as friends of friends really exercising the fiduciary responsibility he is paid for? Do we forget a quarter century ago these banksters patted themselves on the back that firing Steve Jobs was the right thing to do? Or when Gerry Carmen's GSA foisted IBM mainframes on everyone in the government just as the PC and interactive computing were dawning? The same nuts who consider it modern to make emailing a symptom to your doctor into a HIPAA violation. Or when they relied on the witchcraft of technical analysis instead of the hard work of market fundamental, stealing instead of inventing even that, and concentrating more on the imitation than substance, causing the markets to crash? Or banksters who shell game inconsistent products, shifting fees and agreements by surprise, because their autopilot brains were unable to comprehend what real service is? How can you trust people who submit to affectations instead of genuine reality? Given how such fads ran amok in the recent crisis, such individuals should be denied serious employment in the future. Social networking is a bully bubble that needs to be shut down before it bankrupts all of us. That’s why all the idiot hedge funds donated to Obama!
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