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Facebook is valued by the stock market mainly by the profit it's expected to generate in the long run. (Other concerns move the stock price around in the short
by yellowstuff 8y ago
Facebook is valued by the stock market mainly by the profit it's expected to generate in the long run. (Other concerns move the stock price around in the short term, but for most large companies most of the time the stock price will be a good reflection on the consensus view on long term profits.) The value users get from Facebook is almost totally unrelated to profits generated, and therefore to the stock price.
- sonnyblarney 8y ago"The value users get from Facebook is almost totally unrelated to profits generated, and therefore to the stock price." They are definitely related. FB creates some kind of value - some goes to them in terms of profit, some goes to the user in consumer surplus. As FB shows more ads, the consumer surplus goes down. Obviously corps are the one paying, but value to consumers does matter.