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So by your estimation Google is also overpriced? Google's first year as a public company their P/E was around 100 ($193.85 at $2.07EPS), if Facebook IPOs at 33x

So by your estimation Google is also overpriced? Google's first year as a public company their P/E was around 100 ($193.85 at $2.07EPS), if Facebook IPOs at 33x their stock is a bargain in comparison (if you believe FB has the revenue growth potential of Google, as many do) EDIT: oops, I pulled revenue not earnings. Its irrelevant in any case. By the time Facebook IPOs their earnings should be on par with Google's IPO earnings.

mikeryan 16y ago
See this: http://news.ycombinator.com/item?id=1798951 http://news.ycombinator.com/item?id=1798951
deleted 16y ago
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wisty 16y ago
Google grew the market for click ads. Facebook entered a big market, but shown itself to have poor click-through rates. It also has high costs. It might find some new market (selling marketing not sales - banner ads rather than clicks), but it will take years to grow its market. I think Facebook is basically a photo-sharing service, and a host for Farmville (at least, in terms of costs). Photos aren't getting smaller, unless they find some revolutionary compression technology. Hard drives aren't getting much bigger, though RAM and SSD drives will help. Hosting lots of photos (which is the real reason people stay locked-in - it's too difficult to upload their libraries to another network) is not a cheap business. Facebook doesn't get search traffic. People aren't looking to solve a problem (and possible buy something), they are looking for a friend from high-school. There's not click-through in that. Sales (click-throughs) is reportedly poor if you do it in Facebook. What about marketing (banner ads)? They can research how people change their "likes", which gives advertisers some data on how a marketing campaign worked. I'm skeptical though - people aren't on Facebook to shop (look at how their marketplace is going), and they'll just ignore the ads. Besides, it will take a long time to develop the model, convince marketeers to use it, and then wait for the market to grow.
- jamiequint 16y ago
  You're right about Facebook not beating Google in click ads, but they have the potential to tap into a much larger market. Brand advertising. Facebook has all the information and the amount of attention that advertisers are used to spending on TV. Age, sex, location, and interests (in real time now with Facebook 'Like') are all quantified, and at a much deeper level than TV advertisers have access to. TV spend itself is a $60B/yr market, brand advertising is a $600B/yr market. Its not a model that will take a long time to develop, large brand advertisers are already doing significant spend on Facebook, Davide Grasso, Nike's chief marketing officer, says Facebook "is the equivalent for us to what TV was for marketers back in the 1960s. It's an integral part of what we do now." This doesn't even include Facebook's ability to move into commerce on the platform with Facebook Credits, or to leverage the myriad of other opportunities their market position presents them with.

mikeryan 16y ago

See this: http://news.ycombinator.com/item?id=1798951 http://news.ycombinator.com/item?id=1798951

deleted 16y ago

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wisty 16y ago

Google grew the market for click ads. Facebook entered a big market, but shown itself to have poor click-through rates. It also has high costs. It might find some new market (selling marketing not sales - banner ads rather than clicks), but it will take years to grow its market. I think Facebook is basically a photo-sharing service, and a host for Farmville (at least, in terms of costs). Photos aren't getting smaller, unless they find some revolutionary compression technology. Hard drives aren't getting much bigger, though RAM and SSD drives will help. Hosting lots of photos (which is the real reason people stay locked-in - it's too difficult to upload their libraries to another network) is not a cheap business. Facebook doesn't get search traffic. People aren't looking to solve a problem (and possible buy something), they are looking for a friend from high-school. There's not click-through in that. Sales (click-throughs) is reportedly poor if you do it in Facebook. What about marketing (banner ads)? They can research how people change their "likes", which gives advertisers some data on how a marketing campaign worked. I'm skeptical though - people aren't on Facebook to shop (look at how their marketplace is going), and they'll just ignore the ads. Besides, it will take a long time to develop the model, convince marketeers to use it, and then wait for the market to grow.

jamiequint 16y ago
You're right about Facebook not beating Google in click ads, but they have the potential to tap into a much larger market. Brand advertising. Facebook has all the information and the amount of attention that advertisers are used to spending on TV. Age, sex, location, and interests (in real time now with Facebook 'Like') are all quantified, and at a much deeper level than TV advertisers have access to. TV spend itself is a $60B/yr market, brand advertising is a $600B/yr market. Its not a model that will take a long time to develop, large brand advertisers are already doing significant spend on Facebook, Davide Grasso, Nike's chief marketing officer, says Facebook "is the equivalent for us to what TV was for marketers back in the 1960s. It's an integral part of what we do now." This doesn't even include Facebook's ability to move into commerce on the platform with Facebook Credits, or to leverage the myriad of other opportunities their market position presents them with.