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Holy Cow! That is Insane. Facebook's market cap is half a trillion. As somebody that knows nothing I cannot believe that it is that high. It is on par with Amaz

• askafriend 9y ago
  It's a well-deserved market cap. It's an incredible business and they've been firing on all cylinders for years now. The business model itself is so solid, it's scary. It's on better footing than Amazon in my opinion.
  • nightski 9y ago
    Deserved? A market cap is based on investor sentiment, not how hard you work or even necessarily how sound your business is. For the downvotes - are you implying that stock price is directly correlated with business performance and that the market is completely rational?
    • icebraining 9y ago
      What askafriend is saying is that in this case the investor sentiment is appropriate for the soundness of the business. If anything, it's implying the stock price is not always correlated with business performance, otherwise the statement would be redundant.
      • askafriend 9y ago
        This is exactly what I'm saying. My opinion of their business model and their performance is independent of my opinion of the product.
  • 2close4comfort 9y ago
    HA! that is...oh wait you are SERIOUS!)*&^%$# it is cat pictures. That cap is way too high, they only reason it is successful is that people are sheep. Once they figure out how soylent green is made and the FCC chair ignites the internet apocalypse and people will suddenly have to PAY for that "service" Zuck will turn into Bill Gates. And I think we will all be better off.
    • alphonsegaston 9y ago
      I think it’s unlikely that Future Zuckerberg is going to behave with anywhere near the benevolence of post-Microsoft Bill Gates. How he tried to pull one over on the public with his “foundation” already demonstrated that quite clearly.
    • kajecounterhack 9y ago
      Actually Facebook is not "cat pictures." It's a very efficient advertising engine the same way Google is. Similarly to Google (whose revenue is dominated by search ads), Facebook has feeds straight to consumers as well as valuable information about what the consumers are interested in. That's what makes money. Instagram, News Feed, Facebook News --> these are Facebook's Google Search & YouTube. When you look at the numbers you'll see that they're actually similar companies who've monopolized segments of the digital advertising space. If you're going to complain about Facebook's market cap then you should also complain about Google. Facebook's even got "other bets" -- Oculus, Workplace, WhatsApp, etc.
      • 2close4comfort 9y ago
        Advertising that you as the product have to opt into! Google is at least providing a service/product they give you a shiny something while they siphon your data. I think FB is pretty straight forward they take ALL of your information that you are willing to give up and they sell it. repeatedly. without conscience. for the money. If people stopped sharing or looking where would FB be? That is my problem with cap. They can buy other companies but none of them have anything productive to offer either but I bet they sell that info too.
  • ComputerGuru 9y ago
    Whatever else you may think of Facebook, it’s incredibly naive or unfair (not sure which) to suggest they’ve been “firing on all cylinders for years now.” Facebook the user experience has - objectively and measurably (even almost by definition) - taken a severe nose dive since attempting to capitalize on the page views. They’ve spent their time evolving into an advertising behemoth that has upended the advertising market, but very poorly despite all the access they have to metrics and use identifiable data because the user’s best interests and the advertiser’s best interest are almost at polar cross purposes such that it isn’t possible to optimize for one except at the cost of the other. Facebook ads simply do not convert except to Facebook properties (with the obvious “exceptions that prove the rule” aside); they are measurably worse investments than CPC advertising, probably worse than traditional CPM adverts (fake clicks), and probably better than old-school mass media advertising (billboards, bus stations, tv ads). They make their buck on people that either invest xxx thousand dollars until it becomes measurably obvious to the them or that don’t be know enough to measure. Facebooks only “social” innovations that are actually forward-looking past the heyday of feeds and in-feed apps (FarmVille and co) for consumers are Instagram and WhatsApp, both of which were bought out when facebook’s own in-house attempts failed to compete.
    • bonzini 9y ago
      Actually, Facebook shopping ads (from Amazon, Banggood, and the like) and news ads are pretty much the only ads I click. Mostly because, unlike Google ads, when I am browsing Facebook I am not really looking for anything in particular. Facebook ads are like TV ads in that respect.
    • askafriend 9y ago
      Look at their revenue growth, their stock performance, their cost of revenue, their profit margins, and their incredible strategic bets like Instagram/WhatsApp as well as their well-executed transition to mobile. What about hiring of COO Sheryl Sandberg at the perfect time, their well-executed competition with SnapChat, their well executed video strategy, multi-app strategy, look at messenger, look at their growth numbers quarter over quarter which are crazy. I mean you'd be incredibly naive to ignore those things and how well they've worked. Facebook Ads work. They work when you put effort into them and know what exactly what you're doing. Ask any marketing firm. It's a complicated mechanism that has to be learned and experimented with but now Facebook Ads are among the lions share of the advertising market along with Google. They work for many businesses. Just ask Dollar Shave Club. Ask Stitch Fix. Ask Warby Parker. Ask King. Facebook Ads also don't work if all you're doing is throwing $10k into them with a bunch of random targeting. In fact, no advertising works if you don't know what you're doing and if you're not tracking everything to a T. That's not Facebook's fault - their engine is completely self-serve. As are AdWords from Google. You can blow $100k on AdWords and get no results just as easily as you can blow it on Facebook and get no results. I made no value judgement on their innovations. I've learned better than to do that on HN where people become so hostile if you even suggest that Facebook might be useful in some ways. I only made a value judgement on their business which is sound and growing rapidly.
• madeofpalk 9y ago
  ...seems right, right? What does Amazon do? Sell stuff and logistics in a handful of countries. Facebook meanwhile has a very sizeable user base giveing them a lot of attention in a lot of countries, so much so they (allegedly) influenced multiple elections.
• jacksmith21006 9y ago
  No do not think a bubble. Those are also not forward P/Es. Google and Facebook all have incredible growth and justify the prices. Amazon a bit expensive but incredible opportunity and growth.
• myth_drannon 9y ago
  It's a propaganda and indoctrination tool. It's the holy grail of mind control that multiple governments attempted to build for decades. It will be worth trillions until most governments ban it (or already had banned it, not sure the current status of it in China and Russia)
  • champagnepapi 9y ago
    Some very strong words. I don't know if i'd go as far as saying it is the "holy grail", however, I do see your point. For sure it allows propaganda, misinformation, and lies to be disseminated at a very fast pace.
  • johnchristopher 9y ago
    What would the reasons for government to ban it ? (public and behind the scene reasons)
    • cuckcuckspruce 9y ago
      Public: Russian election hacking Private: If we can't co-opt it then it's not useful to us
    • myth_drannon 9y ago
      "Continuing Transparency on Russian Activity" https://news.ycombinator.com/item?id=15758852 https://news.ycombinator.com/item?id=15758852 "It is important that people understand how foreign actors tried to sow division and mistrust using Facebook before and after the 2016 US election." FB angered the US government by allowing foreign agents to use its tools. So that's only an example of Russians using it on Americans. Now imagine how the US government is using it. You are not going to see it in this "Transparency" report that's for sure.
      • njarboe 9y ago
        Or imagine corporations using it.
• samfisher83 9y ago
  Facebook was one of the main tools that allowed trump to win. That is some value right there. How much money would a government or a company spend to control people? That is kind of what facebook is allowing people to do.
  • cisanti 9y ago
    What? But when social media companies help the other guy win (Obama for an example), it's not a problem? Your president is a fool but by the look of it, you deserve exactly that kind of leader.
  • askafriend 9y ago
    And TV was the tool before that, and Radio was the tool before that. What's your point?
    • BenchRouter 9y ago
      Er, those are both insanely large industries with untold amounts of money flowing through them (well, radio not so much but in its heyday). If FB is an industry on the level of TV or radio, then it's almost certainly not overvalued.
      • askafriend 9y ago
        Yes it is company that is larger, more influential, and more relevant than the entire industries of TV or Radio and even print/online journalism at large. The implications and consequences of the consolidation of this power and influence into one company is a different discussion entirely (and an important one).
      • SimbaOnSteroids 9y ago
        FB is better than tv and radio because it can give you ads that are more likely to affect you, because it knows you, maybe better than you know you.
    • uep 9y ago
• ouid 9y ago
  You missed Microsoft 641.20B P/E 28.12
• kobeya 9y ago
  Nearly all of Silicon Valley post-2001 is either (a) online retailers/ecommerce, or (b) parasites hanging off of the $100+Bn/yr online advertising industry. At the top of that latter food chain sit only a handful of companies -- Google and Facebook being the big ones. So much of everything you see in IT and tech in general, from the IT worker to the graphic design consultant to analytics and "big-data" machine learning startups are living off of money that came from clicks on ads or checkout carts at buy-and-ship retailers. Facebook "only" took in around $26Bn in advertising revenue last year. But their ads are considered more reliable and higher quality than Google's products, so admit some speculation about growth potential. With a global advertising market (across all mediums) of half a trillion dollars that is quickly moving into digital, is it any surprise that these top dogs have high P/E ratios? Those P/E's are based on anticipated future revenues, shares of a pie that is rapidly expanding in size. Comparing P/E using earnings of this year doesn't give the full picture. That said, they're certainly not undervalued either, and this analysis does nothing to explain Amazon (WTF is going on there? Surely they don't have $200bn of inventory and warehouse property. Do they?). But 35 P/E is only 3.5x more than the 10x rule of thumb, and the entire market could reasonably grow by that amount. That appears to be what investors are betting on too. (If I had to turn this into stock picking advice, I'd note that if the market is predicting the future accurately here, then one can also say that traditional non-digital advertisers aren't going to do well in the years to come [no surprise], and also that general tech will likely see a huge influx of revenue and capital investment as the top dogs trickle down their market share gains. Baring some black swan catastrophe things will likely be good in Silicon Valley for some time to come, even outside of the FANG companies. But you should not take this as investment advice, which I would not be qualified to give, etc. etc.) ETA: For the record there's a third prominent SV category I forgot to include in the list, which is peer-to-peer services. AKA the sharing economy. AirBnB, Uber/Lyft, Instacart. Part of why these were so exciting in the last two years or so is because it was a gold rush on new markets that hadn't been colonized by tech companies yet. Doesn't really affect this comment in any way though, other than technical accuracy of that sentence.
  • andrewjl 9y ago
    Interestingly the exceptions to this rule, namely companies with $1B+ valuation, are almost all HQed or originally started outside SV.
• gowld 9y ago
  P/E (price/earnings) is a poor metric because it is biased toward hoarding cash (low P/E) over investing profits in new ventures (high P/E). Better to distinguish "cost of revenue" from "investment" and look at P/"cost of revenue"
• kevstev 9y ago
  FB and GOOG have been hoovering up practically all growth in the digital ad space. Those PE ratios are high, but they have been blowing out their earnings quarter after quarter. FB has 2.07 billion monthly active users, about 1/3 of the world population, with significant user engagement. Their userbase is on par with major world religions and continents. Google is the same, though their engagement is a lot more fleeting. Amazon is hoovering up almost all of the retail growth in e-commerce, and is now extending beyond e-commerce. They to an absurd extent, try to match their R&D and capital investment to their revenue and almost operate as a non-profit, so their P/E ratio always looks absurd, but their book value has increased tremendously over the years. This isn't 1999 where like Tesla, there was no P/E ratio because there were no earnings (profits), and in the life of the company there had never been a single dollar of profit made, and companies were often rated at 50x their revenue numbers! These are companies that have shown sustained revenue and profit growth. You can call them overvalued, but this is not in my opinion a bubble, and I think its important you understand the difference between now, 1999, and 2007 or you won't recognize the next one when it comes. In 1999 there was an absolute mania over .com stocks. In 2007 we had a credit bubble that was clear in many statistics and being shouted from the rooftops by some that was impossible to sustain and accompanied by speculators flipping houses, phrases like "buy now or be priced out forever," and other nonsense. Today, while there are some high P/E ratios, they are at least backed up by long periods of sustained growth rates. Of course it can't last forever, and one can only hope that they will gently reduce their growth rates and have a soft landing rather than a hard crash.
  • gmjosack 9y ago
    This is nit-picky but the world population is 7.5 billion these days so it's closer to 1/4 (27.6%) the world population than 1/3.
    • kevstev 9y ago
      That's actually a good thing for their long term outlook- a higher ceiling on their potential growth.
      • 9y ago
• austenallred 9y ago
  Not sure what there indicates “bubble.” A 33 P/E ratio for a company growing as quickly as Facebook seems entirely reasonable.
  • wepple 9y ago
    I haven’t studied FB much, but do they have a strategy for continued growth? They don’t seem to be expanding into new growth areas as much as Goog or Amazon?
    • austenallred 9y ago
      Look at their revenue and user growth. They’re still growing like a weed.
      • em3rgent0rdr 9y ago
        soon they will saturate world population. Their monthly active user count might even be close to the maximum they can attain even...presumably a lot of the people in developed countries who aren't using facebook now are probably doing it for good reasons and so probably won't add to facebook's MAU count.
• appleiigs 9y ago
  It's odd that you think FB is over-priced when Amazon is the one at 292 and FB is in-line with the rest in the range of 10-35. You should be saying "can you believe Amazon is that high, it's on par with Facebook".
• m3kw9 9y ago
  Information sells.
• vincengomes 9y ago
  Also Tencent which is now the fourth most valuable company with 500B+ displacing Facebook