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Revenues and market cap are losly related at best. Eg Apples revenue last year was around 60 billion while their market cap is currently around 330 billion (aro

by BvS 15y ago

Revenues and market cap are losly related at best. Eg Apples revenue last year was around 60 billion while their market cap is currently around 330 billion (around 5.5 times). Facebooks revenue last year was around 2 billion so if this ratio stays (it probably won't) they would "only" need to grow to 9 billion in revenues and already be bigger than Apple. Besides I don't think it will be impossible for facebook to increase their revenues to tenth of billions once they provide display adds outside of facebook etc. (doesn't mean that I think it's likely but it's definitely possible once they really start focussing on monetization).

eggbrain 15y ago
The question becomes, once they start focusing on monetization, will people stick around the service for long? I think the Facebook brand has a neutral perception in the community at best, unlike Apple or Google, who have brands that people truly like. Facebook does not get users because they are Facebook (unlike Apple where people would buy whatever Jobs sells), Facebook gets users because it is where everyone else is. If they start to heavily monetize their service, and other services are available (Google Plus, for example), I don't think users are going to stick around solely for the Facebook brand.
- gojomo 15y ago
  Depends on the monetization methods. Google turning on the revenue didn't drive people away, in either the original CPM or eventual CPC incarnations. In fact, extra results ranked by ability-to-pay (rather than other hypertext algorithms) can be uniquely valuable for many commercial searches; Google's AdWords monetization is thus often a boost, not a drain, on its attractiveness to users. If Facebook finds a similar revenue fountain — and their incremental deliberateness in monetization suggests they want to — look out, world.
maigret 15y ago
You almost defined the P/E - the price earning ratio. Usually, a stock is worth around the order of 10 to 20 times the yearly earnings of the company. If you take all AAPL stocks, their value is around 17 years of earnings. P/E can be higher when investors expect the company to grow in the next years and so soon generate more revenue. An example is Amazon with a stellar P/E of 94. Don't know how long they will sustain that.

by BvS 15y ago

eggbrain 15y ago

The question becomes, once they start focusing on monetization, will people stick around the service for long? I think the Facebook brand has a neutral perception in the community at best, unlike Apple or Google, who have brands that people truly like. Facebook does not get users because they are Facebook (unlike Apple where people would buy whatever Jobs sells), Facebook gets users because it is where everyone else is. If they start to heavily monetize their service, and other services are available (Google Plus, for example), I don't think users are going to stick around solely for the Facebook brand.

gojomo 15y ago
Depends on the monetization methods. Google turning on the revenue didn't drive people away, in either the original CPM or eventual CPC incarnations. In fact, extra results ranked by ability-to-pay (rather than other hypertext algorithms) can be uniquely valuable for many commercial searches; Google's AdWords monetization is thus often a boost, not a drain, on its attractiveness to users. If Facebook finds a similar revenue fountain — and their incremental deliberateness in monetization suggests they want to — look out, world.

maigret 15y ago

You almost defined the P/E - the price earning ratio. Usually, a stock is worth around the order of 10 to 20 times the yearly earnings of the company. If you take all AAPL stocks, their value is around 17 years of earnings. P/E can be higher when investors expect the company to grow in the next years and so soon generate more revenue. An example is Amazon with a stellar P/E of 94. Don't know how long they will sustain that.