4 ms·

Well, a P/E of 100 isn't that outrageous, especially given their growth rate.

by axiom 16y ago

mynameishere 16y ago
Yeah, if they signed up everyone on earth they could get it down to a respectable 10.
- axiom 16y ago
  Come on, that's not fair. They only started playing with monetization strategies a few years ago. Not only that but they are the de facto standard of social media online. That's a pretty big asset that can be monetized in lots of creative ways.
  - redthrowaway 16y ago
    Myspace was the de facto standard in 2005. Napster was the de facto standard for filesharing in 98. Facebook is quickly becoming the next Myspace. By leveraging it as a platform, they're ceding control on UX. People left Myspace because most pages were ugly and blared shitty music at you. I can't count how many "friends" I've removed for sending farmville and mobwars invitations, or having astrology crap automatically posted to my news feed, or, or, or... Facebook is facing a position where monetization means shrinking its social graph, which isn't particularly enviable for the King of Social.
    - axiom 16y ago
      I guess what I was trying to say is that there's room for revenue growth, not that there's no chance they'll tank.
      - elvirs 16y ago
        I agree with you, targeting on facebook is very poor right now. I can target those who has liked a certain page, while I would like to be able to target anyone who is a member of any group with my keyword in title, etc. new facebook redesign encourages people to add more information that matters (like employers, languages you speak, etc. not what music you like and movies you watch) about them which will enable even better targeting. advertisers will love this for higher conversion rate and users will love it(and less ignore ads) because they will see more relevant ads that are interesting to them.
redthrowaway 16y ago
Their growth rate can't be expected to continue. They have to have peaked, just given how many people are really using the Internet (excluding China, natch). They've likely saturated the US, which is by far the most valuable advertising market. Any further growth will suffer from diminishing returns. Facebook's financials are nice, but I'd really like to see their usage and growth statistics, broken down by country. I don't think they can count on growth for much longer; they're going to have to monetize better. They're trying to do that by developing facebook as a platform, but the future in that regard is far from certain. Google's P/E is ridiculous, but they have solid profits from ads and they're expanding hugely in mobile. Google's growth can be expected to continue, at least for the foreseeable future. I don't think we can say the same of Facebook with any degree of certainty.
- yequalsx 16y ago
  Their growth rate in new users can't be expected to continue but their growth rate in revenue might be justified. Clearly Goldman thinks their plan for revenue is quite good and they expect Facebook's revenue to greatly increase while maintaining a sufficient profit margin. I expect we've only seen the beginning of their revenue growth.
  - redthrowaway 16y ago
    I don't think Goldman's investment can necessarily be taken as a sign of their confidence in facebook's financials, or its future ability to justify its $50B valuation. Rather, it should be taken as a sign of Goldman's confidence in their own ability to profit from the deal, both from the private $1.5B sale of stock, as well as its favoured position come facebook's inevitable IPO.
    - danenania 16y ago
      Exactly. Look no further than subprime if you doubt this. There is no group more expert at (knowingly) inflating a bubble for their own gain. And they take no risk because they get 0% loans from the Fed and are the definition of "too big to fail". This is dangerous behavior.

Well, a P/E of 100 isn't that outrageous, especially given their growth rate.

by axiom 16y ago

Well, a P/E of 100 isn't that outrageous, especially given their growth rate.

mynameishere 16y ago

Yeah, if they signed up everyone on earth they could get it down to a respectable 10.

axiom 16y ago
Come on, that's not fair. They only started playing with monetization strategies a few years ago. Not only that but they are the de facto standard of social media online. That's a pretty big asset that can be monetized in lots of creative ways.
- redthrowaway 16y ago
  Myspace was the de facto standard in 2005. Napster was the de facto standard for filesharing in 98. Facebook is quickly becoming the next Myspace. By leveraging it as a platform, they're ceding control on UX. People left Myspace because most pages were ugly and blared shitty music at you. I can't count how many "friends" I've removed for sending farmville and mobwars invitations, or having astrology crap automatically posted to my news feed, or, or, or... Facebook is facing a position where monetization means shrinking its social graph, which isn't particularly enviable for the King of Social.
  - axiom 16y ago
    I guess what I was trying to say is that there's room for revenue growth, not that there's no chance they'll tank.
    - elvirs 16y ago
      I agree with you, targeting on facebook is very poor right now. I can target those who has liked a certain page, while I would like to be able to target anyone who is a member of any group with my keyword in title, etc. new facebook redesign encourages people to add more information that matters (like employers, languages you speak, etc. not what music you like and movies you watch) about them which will enable even better targeting. advertisers will love this for higher conversion rate and users will love it(and less ignore ads) because they will see more relevant ads that are interesting to them.

redthrowaway 16y ago

Their growth rate can't be expected to continue. They have to have peaked, just given how many people are really using the Internet (excluding China, natch). They've likely saturated the US, which is by far the most valuable advertising market. Any further growth will suffer from diminishing returns. Facebook's financials are nice, but I'd really like to see their usage and growth statistics, broken down by country. I don't think they can count on growth for much longer; they're going to have to monetize better. They're trying to do that by developing facebook as a platform, but the future in that regard is far from certain. Google's P/E is ridiculous, but they have solid profits from ads and they're expanding hugely in mobile. Google's growth can be expected to continue, at least for the foreseeable future. I don't think we can say the same of Facebook with any degree of certainty.

yequalsx 16y ago
Their growth rate in new users can't be expected to continue but their growth rate in revenue might be justified. Clearly Goldman thinks their plan for revenue is quite good and they expect Facebook's revenue to greatly increase while maintaining a sufficient profit margin. I expect we've only seen the beginning of their revenue growth.
- redthrowaway 16y ago
  I don't think Goldman's investment can necessarily be taken as a sign of their confidence in facebook's financials, or its future ability to justify its $50B valuation. Rather, it should be taken as a sign of Goldman's confidence in their own ability to profit from the deal, both from the private $1.5B sale of stock, as well as its favoured position come facebook's inevitable IPO.
  - danenania 16y ago
    Exactly. Look no further than subprime if you doubt this. There is no group more expert at (knowingly) inflating a bubble for their own gain. And they take no risk because they get 0% loans from the Fed and are the definition of "too big to fail". This is dangerous behavior.