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A friend of mine was thinking of purchasing Facebook stock, I mentioned to him that I didn’t think it was a great idea. What are some of your thoughts?

Thanks in advance

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I think facebook is a fad like slinky's, hoolahoops, or stretch armstrong toys.  If you are planning in investing in facebook as a long term deal, you are going to lose your azz.  Besides selling advertisement how are they going to produce income?  If they start trying to charge for accounts, everyone is going to just leave and go to the newest free site.  Bad Idea to put ANY money towards Facebook, period.

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It's such a big maybe.  I wouldn't buy Facebook stock unless it's with money you are willing to gamble.  At a glance, FB is trading at 116 times earnings which means they need some pretty incredible earnings growth to justify that number let alone push the stock higher.  I won't argue with anyone that says the potential exists for Facebook to create new sources of revenue from their massive user base which makes a win possible but you also can't ignore the threats to their business model either.  There are no shortage of challengers waiting out in the wings ready to out innovate Facebook and turn them into the next Myspace.  It's also possible that people may simply burn out on the whole social networking thing and greatly diminish their usage of the site which will kill ad revenues.

I'd be happy to take a gamble on Facebook but not at 116 times earnings.  I'd pay 30-50 times earnings maybe but no more.  I'm just not willing to gamble when there are quality companies out there with good growth prospects trading for MUCH cheaper like Apple.

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I agree with this. I think Facebook is going to be the next Google, and I have faith that they're going to expand their company to encompass more than just a single social media site. But I'm not paying 100+ times earnings for it. At 25-30 times earnings, I'm willing to jump in. They need to show me some massive growth, or a huge price drop before I'm interested.

I don't think a competitor is going to come outdo Facebook. They're too big, with too much market share and too much brand recognition. It's like saying that Google is going to fail when everyone starts using the next big search engine, or Amazon is going to fail when the next big e-commerce site launches. These companies are huge, with enough revenue and momentum to keep crushing the competition for the foreseeable future. Look at Google +. Even with all of Google's resources and ingenuity, they can't build a legitimate competitor to Facebook, so I have a hard time believing a start-up company is going to do it.

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Facebook doesn't have the technical ability to be the next Google.  Remember where Google started.  Google was started by people who are actually brilliant computer scientists who had the vision to bring in experts in the other stuff that they needed.  Facebook has not yet demonstrated the ability to do this, and I doubt they will.

I believe Facebook will fail, within the next few years, just as Myspace did.  The replacement might be Google+, or it might be something completely new that we haven't even heard of yet –– but I believe Facebook will fail.  I would not invest in them.

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I'd have to say, that every move Facebook makes seems to be in the wrong direction.  I wouldn't hesitate to jump ship if a real alternative existed - and Google+ aint it.

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I have firmly believed that Facebook is garbage from the beginning.  And I'm not impressed by the arguments that it's advertising model is valid.  I worked in the field of advertising for over twenty years and Facebook is not a valid advertising model as currently set up.  It's a public relations model; big difference.  So, what's the difference?  Advertising results can be measured with sales numbers vs advertising dollars spent.  PR is more intuitive; more pure guesswork.  And this is Facebook's problem.  "Advertisers" cannot objectively measure the results they are getting.  Only the very wealthiest companies put money into PR and even they don't spend anything like the amount of dollars on that that they spend on advertising.  And companies cut back on PR sooner as well; using it only as long as they have to in order to manage specific public perception problems their company may be temporarily facing.

Read my lips; Facebook is GARBAGE.

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You lost me.

I am personally much more likely to buy a product when someone I know has used it and recommends it.  Just look at how word of mouth about brands spreads here on arfcom.  Sheesh, we just had another "Saddleback Leather" thread.  Are you seriously suggesting that purely passive ad strategy, such as newspaper listings or radio commercials, is superior to what Facebook offers?

Do you think Arfcom site sponsors are wasting their money on "public relations?"

I think the potential with Facebook is huge, they just can't get their act together.

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Dude, it's a SCAM.

Zinga, Facebook, Groupon, they are ALL just fucking scams initiated by Morgan Stanley to glean money from naive investors.

That's all it's about.  The only potential is for the insiders who are the original investors of these bullshit companies to rip off the "little kids".

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Dude, it's a SCAM.
Zinga, Facebook, Groupon, they are ALL just fucking scams initiated by Morgan Stanley to glean money from naive investors.
That's all it's about.  The only potential is for the insiders who are the original investors of these bullshit companies to rip off the "little kids".

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I agree with this. I think Facebook is going to be the next Google, and I have faith that they're going to expand their company to encompass more than just a single social media site. But I'm not paying 100+ times earnings for it. At 25-30 times earnings, I'm willing to jump in. They need to show me some massive growth, or a huge price drop before I'm interested.

I don't think a competitor is going to come outdo Facebook. They're too big, with too much market share and too much brand recognition. It's like saying that Google is going to fail when everyone starts using the next big search engine, or Amazon is going to fail when the next big e-commerce site launches. These companies are huge, with enough revenue and momentum to keep crushing the competition for the foreseeable future. Look at Google +. Even with all of Google's resources and ingenuity, they can't build a legitimate competitor to Facebook, so I have a hard time believing a start-up company is going to do it.

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Google is much more than a search engine.  In fact there are better search engines that dont bubble you.  

The numbers for Facebook simply dont add up.  This ipo was nothing more than a way for a few execs to cash in.  It is a $5 stock.  They haven't shown any possible way to generate any revenue other than through new users.  The markets they make the money from are already saturated.  Whats left will only add a little over $1 a user.  Until they come up with some new ideas I would steer clear of any long term investing regardless of the price.

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Facebook certainly needs new revenue streams, but I think they'll find them. They've done an excellent job of integrating FB with other brands and products and that's going to provide a lot of potential revenue.





As for ad revenue, they still have a lot of room to grow. Only a relatively small percentage of users even see ads (I think it's about 25-30%) so they could triple their ad revenue just by expanding that to all users. And being that the display ads are small, unobtrusive, and most users don't seem to mind them, I don't think their current display ad format is in danger of failing.

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I think this is Zuck's fault.  He is clearly either not capable of hiring the right people or not allowing the people he hired to make moves to expand their revenue.  Jmo but as seen by the current company structure all decisions stop at his desk.  I believe it unlikely that he gives any of the people around him any authority to make needed changes or implement new ideas because he doesnt want anything messing with his creation.

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Zuck's a genius.  Not only is he able to reward his employees by putting them in a situation where they can cash out at far more than the company is worth but he gets to maintain the majority of voting power for his creation after all is said and done.  I'm sure he's laughing his ass off.

He literally stole the shirt right off the backs of all the willing institutional and retail investors who couldn't see the forest for the trees and got caught up in the hype.  Anyone with even a little bit of sense knew this IPO was a turkey before it launched.  There were plenty of people in GD alone that called this well in advance.

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Zuck is a genius but it didnt take a genius to cash out on the wild popularity of fb.  I think there is no question the man knows what he is doing on the tech side of things, but i really believe he is lost on the business side.

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in my amateur opinion it is over priced and like many of the .com stocks that went bust during the tech bubble the company has no actual product. Going back to the tech stock bubble, Amazon survived it because they sold real products. Other companies with actual product also survived. But many of the companies that were basically there just to have a stock to trade disappeared
FB sells advertising space (which most people on the internet these days block) and personal information. Well people are starting to wise up on the second one and are also getting upset with FB's poor privacy policies and constant changing of the interface. Only a matter of time before some other social networking site becomes the one everyone flocks to or people wise up enough to not put any personal information that has sellable value on it

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I think you're mis-remembering the dotcom boom and what led to the collapse. IMO, Facebook doesn't resemble the tech stock bubble of the 2000's, and instead is simply an overpriced stock. Amazon didn't survive the .com burst because they sold real products. They survived because they had real profits, like Facebook. There are thousands of companies out there that are successful and profitable who make their money selling services (like advertising), which are real products, just like the latest gadget you ordered from Amazon. Insurance, advertising, financial services, etc are all "real products" with value, whether they're tangible or not.

During the dotcom boom, new tech companies were going public almost weekly with no earnings, and sometimes even no revenues. People were launching websites and creating companies, then going public as a means to fundraise money to launch the company. People were investing in the idea that these tech companies might someday generate revenue and profits. The bubble collapsed when investors began to accept the fact that these companies weren't generating any revenue and had no potential to do so.

Facebook, like Amazon, was a profitable company before they went public. They already have an established revenue stream and are profitable. Because of this, they are easily to valuate on a fundamental level, and determine what the actual company is "worth". Both companies are trading at very high multiples right now, because investors are banking on increased margins, more revenues, and strong growth in the future. Whether that comes to fruition or not is still up for debate, but the companies at least have some fundamental value to them and are generating money to continue operating for the foreseeable future. That makes them both a lot different than what we saw during the 2000 tech bubble.

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Now I'm hearing facebook stock is going up, anyone know why the change?