***** Facebook *****

Posted on May 21st, 2012 · Stocks

***** Facebook *****

I think that most of you guys know what FACEBOOK is. I’m also thinking that most of you guys know that last Friday morning Face Book went public with an IPO price of $38 a share. As I type, Facebook (NASDQ:FB) is currently trading at $33.01-$33.03. That means, that for right-now, the stock has lost roughly 5 bucks a share…Take it from me, for an IPO to “drop” from it’s offering price in such a “quick” move after coming to market, isn’t good!

Look, I still use a phone like they used back on the old Lassie tv series. You know the one, where Jeff’s mother (or Tommy’s mother, depending on how old you are) would say something like “Jenny, could you get me Linda down at Miller’s Pond.” The point that I’m trying to make, is that I really don’t know too much about this “new thing” called social media.

What I do know, is that you CAN’T have Facebook (which claims 900,000,000 million users) valued at something like $100 billion–only netting $1.9 billion a year in revenue. Now, I could be dead wrong here, but I seriously doubt that most of the folks who currently use Face Book for free- are going to be inclined to ever pay for the service…in addition, I kinda think that most of Facebook’s users have absolutely no interest in the advertisements or products that Face Book currently markets…My thought process also tells me that Face Book is going to have a huge and I do mean a HUGE problem monetizing its business.

So…what initially looked like a “goldmine” IPO may just prove to have been nothing but fool’s gold.

Just thought I’d tell you my Facebook thoughts…Jeff Eats would love to hear yours.

17 Comments to “***** Facebook *****”

  1. STOCKGURU says...

    You hit the nail on the head.
    Face Book is a free service.
    Tons of adults use it but it also is used by kids of all ages.
    The kids have absolutely no buying power.
    Face Book is a great service but its subscriber base isn’t going to pay to use it and couldn’t give a rat’s ass about using it to buy products.
    YOU TUBE is the same deal. Great service but very little chance to sell anything on it.

  2. Jake Cramer says...

    IPO was mishandled by NASDQ.
    Stock is worth$5-6.
    These social media ipos are priced way too high. Tons of hype in them.
    You are so right Facebook users arent looking to spend money. They got the service for free and never really click on ads etc.
    You Tube is similar. No money coming in although people use it like crazy.
    By the way your YELP is another one that has very little revenue coming in.
    This space isnt a money maker.

  3. Paul W. says...

    Just checked the price and FB is $33.65. That’s quite a drop from $38.
    Facebook is a fabulous social media device. It seems like everyone and their mother has a Facebook account.
    You correctly point out that very little revenue is generated from the site.
    The question going forward is can Facebook get its users to buy things from advertsiers.
    Like you I dont see it being very successful.
    The people currently using it arent shopping they are just playing around with friends and family.
    Dont like this one as a stock play.

  4. Larry G. says...

    This is a real easy one to figure out.
    I have a facebook account.
    Right now it is free.
    If Facebbook came to me and said that it wanted to charge me $1 a month as a service fee, would I keep the account? Nope.
    Next, in the two years that I’ve had a Facebook account, not once have a clicked on any advertisement.
    Facebook is a good internet service. If it starts to charge for what it currently provides for free you can kiss most of those 900 million users goodbye.

  5. 900,000,000 users and Facebook has minuscule revenue.
    Nobody buys anything from or based on Facebook.
    Facebook is a fun Free service.
    Now that its a public company people will begin to appreciate
    that the company is really a business disaster and that’s stock isn’t one to fool with.

  6. Angie'sList says...

    Over hyped new issue at 38 bucks. No revenue to speak of and a load of users who just come because it’s totally free. Someone here mentioned You Tube. Basically same thing. Great service but it doesn’t produce revenue. Zuckberg better figure out how to make something that’s free make it’s subscribers buy something and do it real fast.

  7. StockBoy says...

    If Facebook doesn’t figure out how to get money out of those 900,000,000 users this company is doomed. Based on current revenue this should be an 8 dollar stock.

  8. Wally Cleaver says...

    You are right Facebook has its worked cutout for itself. I agree with you that its going to be a very hard task for it to increase revenues.

  9. Facebook is a going to prove to be a huge disaster. Just stop for a minute and think what 900 million users are doing. Absolutely nothing but talking nonsense to each other. Facebook doesn’t make anything from this free service.
    For right now you have a company valued at about $85 billion doing net revenue of about $2 billion. If you just put 85 billion into a 2 percent savings account you would earn almost the same number. Facebook right now is around 32 it should be trading at 15 tops.
    Unless Facebook can get Users to buy something it is going to be a mess.

  10. James D says...

    More and more users access Facebook via mobile devices. The small screens on iPhones, Androids etc means less seeing advertisements and less clicking them on. Since FaceBook is advertising dependent…..

    This really hurts the Facebook revenue model and was admitted in the revised prospectus by Markie Z and Company

  11. NOMAN2323 says...

    facebbok is worth tops 3 4 bucks a share.
    looking at the stock screen right now and its 30.17.
    only down about 8 bucks since it came public a few days a ago.
    remember myspace? samething is coming here.
    no way to make any money from 900,000,000 people talking baout what they wore to work today.

  12. LOUISBENDER says...

    fb is currently trading at 28.80.
    that’s some mess.
    zukerberg is full of crap.

  13. Ed Robinson says...

    nice call here jeff.
    fb is currently 25.53

    • RFD says...

      try 19.98 a share.
      they got no revenues.
      just a hype co.

      • gary says...

        $49. today

        • JeffEats says...


          Just had a chance to read your comments.

          So…how many shares of Facebook did you buy in the 19s?

          I didn’t think so.

          Really enjoy all of your comments and input…

          Thanks for reading…

          • gary says...

            I did buy over 4000 shares ($100k) at slightly over $24 last August.

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