Just at its moment of triumph, with a $100 billion valuation looming for its share flotation, Facebook appears to be in deep trouble.
Facebook is the world’s second most popular word that starts with “F” and ends with “K”, but there was always something highly suspect about its business model – tens of millions around the world fill it up with content each day, but share not a penny of its massive revenues, mainly culled from advertising sales.
This month a much hyped revamp of its page structure has left its 300 million regular users (845 million registered users) in chaos, unable to understand, still less navigate the new design. It may prove to be the most expensive design mistake in corporate history, leading either to the biggest Internet bust so far, or at the very least a massive downsizing of the share price.It seems like another example of Facebook’s rampantly dictatorial boss Mark Zuckerberg attempting to impose his will on his global army of serfs. This time his reach may exceed his grasp.
Ad revenue has topped $3 billion per year, but unlike, say, YouTube there is no way of sharing the revenue with popular pages.
Scott Schermerhorn, chief investment officer at US money management firm Granite Investment Advisors, has his doubts about the proposed share price. “We had some clients call and once we step them through the numbers, they sober up,” he says. “The valuation is 100 times earnings in a stockmarket that is trading at 12.” that is why the lead banker to the float is Morgan Stanley and not Goldman Sachs – MS are well know to have thousands of ultra-rich clients prepared to dig into their pockets without asking too many difficult questions.
The number of ads on the site has risen by 42% over the past 12 months, with the average price paid for each spot up by 18%. When it started its main source of revenue was selling data about its users to ad agencies and other number crunchers. Our data.
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4 Responses
These are my issues with Facebook ( unrelated to article)
1) privacy… using a real name, email address, Geo location, being target marketed along with my “friends”. Purchasing habits, income and hobbies being disclosed to greedy corporations. What I “like”…
And not to mention any given government agency monitoring what I say and do.
Hi fisherman69, I agree, FB’s “privacy” policies are really invasive! There are ways around it though, I do NOT use my name on there, I do not put down any identifying information, nothing about where I work or worked, where I went to school, my location(!!!!!), I do not allow geotracking…. they are insistent about asking me for that information, I either don’t fill it out or outright lie, it’s none of their business where I live, where I am right now, where I grew up, where I work, my work history, where I went to school, and such.
Well that Facebook zucks, everybody knows –
there isn´t any need to prove it .
I am not using it, I am waiting for a social network
that really fits my needs (which doesnt yet exist)
cause I don´t trust Google, either – maybe we should actually found one ?
Regarding the commercial outlook,
I cannot say and wouldn´t if I could –
so what the heck, let us wait and see !
I’m not sure what the point of this article is. It seems late, offers no new information and doesn’t back any of its statements with any facts. Is the article about timeline being a mistake? Is it about profit sharing with content creators? Is it about Facebook being a bad investment?
The article offered no evidence of timeline being a massive failure, and for the average person I doubt it is. It does create some issues for users using group pages as a type of forum. How is timeline losing them money?
What are the issues with not sharing profits with content creators? Zuckerburg created a free platform to discuss and share things. Why would or should he share his company’s profits with the people who are already benefiting from his free service? A content creator who isn’t happy with facebook can try and design, program, host and maintain his/her own website with advertising to develop his/her own revenue stream. Good luck breaking even.
I’m not sure how creating and leading one’s own company makes one a dictator. What makes his employees serfs? Everyone with half a brain understands that Facebook isn’t worth the $100 billion it was evaluated at.
By the way, I found this article (and webpage) via Facebook, so this site is benefiting from the evil of Facebook.