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A P/E ratio of 30-45 would still indicate the market believes in a very high potential for growth. That just doesn't seem reasonable. Their potential user base
by shangrila 14y ago
A P/E ratio of 30-45 would still indicate the market believes in a very high potential for growth. That just doesn't seem reasonable. Their potential user base is already nearly fully saturated (the SEC filings show no growth at all in some markets), and people already seem to spend as much time as they possibly could online using FB. What could FB do to grow revenues that much besides sell more of their users' data or cram every page with more ads, both of which would risk driving away users?
- sabat 14y agothe market believes in a very high potential for growth. That just doesn't seem reasonable. It is not unreasonable to think that Facebook will expand beyond its current incarnation, similar to how Google is no longer just a search engine, and Amazon is no longer just an online bookstore. That's what the market seems to be saying here.
- taligent 14y agoWell firstly it is ridiculous to assume that their potential user base is nearly fully saturated. There is massive opportunities if they can get China and India onboard. And there is still plenty of growth as technology spreads through the remaining parts of the world. As for revenue they don't need to have more ads. They just need to continue to provide different ways for advertisers to find the slice of Facebook users they need. Facebook already is much, much better than Google and eventually more and more advertisers will realise this.
- factorial 14y agoHasn't Facebook lost a few million members in the US this year? Sure, you can argue that Facebook may gain a stronger foothold in other markets, but I wouldn't dismiss the thought that Facebook has a rather fad-ish nature and people may get bored of it sooner or later.