The social network. They have a graph of the interpersonal relationships of the vast majority of the modern Western world. Including data of their daily habits. It's simply the richest mine of marketing data on the planet. If people start talking about some hot new product, FB is the first to know, ahead of Google, Apple, and Amazon. And they know which age demographics and which geographic locations are hotspots. All in real-time.

All of which disappears as soon as people quite using FB. This "Asset" is a by product of everyone using there "Web page".

It'd be extremely difficult to replicate that network.

It's already been done at least a couple times, MySpace, Google circles etc. FB took this network away from MySpace and Google circles failed to take it away from FB. It's not difficult to replicate at all, the difficult part is making your web page the most popular. If that happens FB "Asset" is gone.

You're right there is some risk of the cool kids picking up something else. Snapchat, etc. But, there are huge headwinds to gaining the "market share" that Facebook has. I think it's unlikely that Facebook gets "Myspaced" anytime soon.

You mean the same headwinds that FB faced when they passed MySpace? I think this happening is no more or less likely at any given moment. All it takes is the right idea with the right hype at the right time and FB is relegated to a distance 2nd place...and get's sold for 35M dollars. That is a major risk and it is a risk that does not exist nearly to the extent in any other sector because as I stated most products work together, social networks don't.

~Matt

The problem with Facebook at its current valuation is that the expectation that it becomes "the next Google" is already baked into the price. Anyone buying in today is taking on a ton of risk relative to any credible projection of future returns. This link explains it far better than I can (the numbers are a couple years out of date, but the general point still stands).

There's some good insight down in the comments section at that link too...

The current valuation applied to the shares is already so high the market is assuming that growth is destiny. It has to happen to avoid significant, permanent losses. So much so, despite Google earning almost 923% more after-tax profit, it is valued only 70% higher than Facebook. That means the resulting gap isn't closed by new product offerings (like you said - Facebook is already so dominant it's captured almost all of the free world so growth is going to have to come not from signing up additional users so much as monetizing those it already has, especially when you consider the economic value of users not yet signed up is much smaller due to the sociodemographic nature of their respective countries) there is no safety net. On the flip side, if it does happen, unless we enter a bubble overvaluation territory like the late '90's, the risk-adjusted returns are, at best, pathetic. They no way compensated them for the potential downfalls to which they had to expose their portfolio. Making 70% on your money for such exposure, presuming the ending valuation looks somewhat like Google once these missing profits have manifested, is not something about which to brag. You were screwed. Sure, you're 70% richer but you had to put yourself on the line for a disproportionately small payoff. It would have been far more intelligent to speculate with something like call options on airline stocks if you were wanting to take a low-outlay-high-reward speculation.

Of course, this is all looking through the lens of someone who only buys something they plan on holding onto for several decades. If your game is to speculate on a much shorter timeframe... good luck I guess.

The current valuation applied to the shares is already so high the market is assuming that growth is destiny. It has to happen to avoid significant, permanent losses.

Exactly. IMO it was over valued at the IPO and is now WAY over valued. People are investing on the idea that FB WILL make massive returns. You have a similar issue happening with companies like Amazon. There seems to be this idea that "Wow they are so far reaching, of course they will be able to make a whole lot of money". Sales revenue continue to go up...they are still struggling to even make a profit.

I honestly have no idea exactly what people are thinking. If you had a company like GM, GE, Exxon etc that turned those kind of numbers people would be dropping the stock like hot potatoes. It's almost like there's this idea that the rules don't apply to internet companies for some reason. Yet, IMO, they are FAR more risky.

If we valuate FB like we do amazon FB stock should be around 800 or so so maybe FB is actually under valued.

~Matt

You're discounting the fact that FB already is moving far beyond the original social network. Between their purchase of IG as another social sharing tool (and making it painfully easy to advertise there), as well as their continued development in mobile messaging apps (e.g. WhatsApp, Messenger), and the Internet.org project (essentially an owned portal to enter the Internet, similar to the way WeChat operates in China)...I don't think you're putting enough stock in they're branching away from the core products.

This also doesn't discount their further refinements on Search. There's a reason they broke off the Bing relationship for web results: they want to really game their search functionality.

If anything, the advertising component of Facebook rivals only that of Google. As long as that cash continues to roll in, they aren't going anywhere.

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Editor-in-Chief, Slowtwitch.com | Twitter

 I don't really have much to add to this discussion about share valuation but I will put in my two cents about the future of Facebook. All I know is that every single one of my employees over the last five years have a Facebook account and are somewhat active on that account . That is not to say they don't use other platforms. They all seem to use Snapchat, but not one of them has a Twitter account and most of them have Instagram accounts. And I'm talking about 35-ish employees per year all in the in the 20 to 25 year age group. So keep in mind this age group is the group that everyone warned was no longer using Facebook five years ago. Here's the reality they: are using it all the time. They just use it differently and people my age (40s-50s).

Although all social media platforms are shallow, Facebook is the only one that I would advertise on. And I have. It's a great way to target your message. You get way more bang for your buck than on traditional advertising. Especially for a small to medium size business that cannot afford that very expensive process of tracking traditional advertising.

Long live our Facebook masters!

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Proud member of the MSF (Maple Syrup Mafia)

The Facebooks come and go but the Lavander Room is timeless.

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I'll be what I am
A solitary man

FB hits all time high: $122.20

Now has 4 user products with 1 Billion+ monthly users.

Looking forward to earnings announcement next week. Looks like higher highs are coming.

Microsoft up 6% today after earnings. Almost reaching its highest level in years.

Facebook still sucks ass.

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How does Danny Hart sit down with balls that big?

I have an inverse theory of human value.

The theory is that:
Ones income is inversely related to how useful one is. (I am not self righteous. My income is pretty high).

The more useful the activity, the lower the pay. (Useful things like farm work and teaching pay nothing).

Whereas, useless stuff is super well compensated. Mark Zuckerberg is the best example. Not only did the bastard waste his life messing around with social media. But he created something so addictive and wasteful that all if us are wasting our time with it as well.

Well, not all of us.
I've never been on FB and doubt I ever will.

But, I've been IN FB for 3 years and am sure glad that bastard did what we did.

But, I've been IN FB for 3 years and am sure glad that bastard did what we did.

I wish I would have bought Nintendo stock at the beginning of the month and got out a couple days ago :-)

~Matt

You'll be reposting this next week. Go ahead and get you some now. Live on the edge!

You'll be reposting this next week. Go ahead and get you some now. Live on the edge!

Sure, If I had some extra money laying around I might take a stab at it. Not so much :-)

My guess is that the companies rapid rise is probably over. They've had a month of hype and more then likely things are going to level off as they do and the price will drop. If you want to really make some money short everything I say I'm going to buy :-)

~Matt

Verifed by ER doctors:

http://forums.studentdoctor.net/...257985/#post-3335748

Facebook pays people/computers in India to click on the adds. Is that news to you?

Like the add-clicks, neither that or the lives of people who exhibit themselves on Facebook are real.

I can understand to buy/sell his stock and make a profit, but actually believe that this is how society is like borders on insanity.

I can hear Zuckerberg laugh about the sheep buying into all of that. Actually, he is always smiling about it, but his laughter sometimes is louder than the Caltrain horns [{:-}