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Interesting to see that Google's Y/Y revenue growth beats Facebook's for Q2 2012. (Edit : Google's Y/Y revenue growth was 35% and Facebook's 32%. In contrast,

Interesting to see that Google's Y/Y revenue growth beats Facebook's for Q2 2012. (Edit : Google's Y/Y revenue growth was 35% and Facebook's 32%. In contrast, Google's market cap is about two times that of $FB)

sriramk 14y ago
That is not a good statistic - I was at MSFT when every few months an exec would trot out and talk about how GOOG/APPL's entire revenue fit inside some small MSFT division's numbers. And then they had to stop. The only thing that matters is growth.
- i0exception 14y ago
  I am talking about growth, not numbers. Google's Y/Y revenue growth was 35% and Facebook's is around 32.
- hexagonc 14y ago
  ...every few months an exec would trot out and talk about how GOOG/APPL's entire revenue fit inside some small MSFT division's numbers. When was that?
BvS 14y ago
Not if you exclude Motorola which wasn't part of Google 1 year ago.
tatsuke95 14y ago
This is the key. Facebook is still supposed to be in rapid growth mode, and they're getting beat by "old" competitors? Not a good sign.
- taligent 14y ago
  32% Y/Y growth isn't rapid ? And how is Google an old competitor when they were founded only 6 years prior to Facebook ?
  - tatsuke95 14y ago
    >"32% Y/Y growth isn't rapid ?" Not fast enough. Apparently the market agrees. >"And how is Google an old competitor when they were founded only 6 years prior to Facebook ?" That means Google has been around twice as long as Facebook. You don't consider that a long time in the tech world?
taligent 14y ago
And your point is what exactly. That Google is far more diversified with its income than Facebook. That Google doesn't break out Google+ P/L so we can't do a direct comparison. That search advertising has different dynamics to social advertising. I mean did you also want to compare Facebook with Exxon Mobile or Starbucks ?
- i0exception 14y ago
  Google is a direct competitor to Facebook when it comes to Ads. It doesn't really matter if the advertising is search based or social. They are vying for a piece of the same pie. The really high valuation of Facebook is partly because investors expect it to grow substantially, at least in the short term. The fact that it's growth is lower than that of it's direct competitors (who have a much lower P/E) is not a good sign for the stock in days to come.
  - taligent 14y ago
    But again. Google is diversified beyond just advertising whilst Facebook isn't. It seems illogical to just blindly compare total revenues. Why not compare Facebook/Google to Apple then since they are also vying for the same piece of the pie ? Or News Corp ? Or Vogue magazine ? Or Playboy ?
- wutbrodo 14y ago
  The way that valuation of a company works is that the multiple of market cap over annual revenue is supposed to reflect (mainly) expectations of growth. This multiple for Google is less than Facebook's by a LOT, because Google, as a relatively mature company working off of a larger revenue base, is expected to grow more slowly percentage-wise, all else held equal (this has been borne out by the vast majority of companies, and is pretty much common sense, as doubling sales is a lot harder to do when one is already doing tens of billions of dollars in sales). The fact that Facebook is growing more slowly than a company with much lower expectations of growth instead of living up to its expectations of hypergrowth (as implied by the valuation) is a signal that the current growth expectations (as implied by the valuation) are too high (hence the "all else held equal" part of the last paragraph: if a company isn't performing as well as it should, then it's of course possible that it'll grow more slowly than a larger competitor with lower expectations of growth). This of course ignores the possibility that FB comes up with an amazing revenue-boosting innovation like AdWords and begins to fulfill their expected growth rate. Things like "search advertising has different dynamics to [sic] social advertising" can't just be completely removed from consideration. They're precisely what determine if Facebook is inaccurately valued or if the huge growth expected from it will occur/continue.
jonknee 14y ago
Google's market cap is $200B vs Facebook's $57B. It's closer to 4x than 2x. They also make significantly more profit than Facebook does revenue.

sriramk 14y ago

That is not a good statistic - I was at MSFT when every few months an exec would trot out and talk about how GOOG/APPL's entire revenue fit inside some small MSFT division's numbers. And then they had to stop. The only thing that matters is growth.

i0exception 14y ago
I am talking about growth, not numbers. Google's Y/Y revenue growth was 35% and Facebook's is around 32.
hexagonc 14y ago
...every few months an exec would trot out and talk about how GOOG/APPL's entire revenue fit inside some small MSFT division's numbers. When was that?

BvS 14y ago

Not if you exclude Motorola which wasn't part of Google 1 year ago.

tatsuke95 14y ago

This is the key. Facebook is still supposed to be in rapid growth mode, and they're getting beat by "old" competitors? Not a good sign.

taligent 14y ago
32% Y/Y growth isn't rapid ? And how is Google an old competitor when they were founded only 6 years prior to Facebook ?
- tatsuke95 14y ago
  >"32% Y/Y growth isn't rapid ?" Not fast enough. Apparently the market agrees. >"And how is Google an old competitor when they were founded only 6 years prior to Facebook ?" That means Google has been around twice as long as Facebook. You don't consider that a long time in the tech world?

taligent 14y ago

And your point is what exactly. That Google is far more diversified with its income than Facebook. That Google doesn't break out Google+ P/L so we can't do a direct comparison. That search advertising has different dynamics to social advertising. I mean did you also want to compare Facebook with Exxon Mobile or Starbucks ?

i0exception 14y ago
Google is a direct competitor to Facebook when it comes to Ads. It doesn't really matter if the advertising is search based or social. They are vying for a piece of the same pie. The really high valuation of Facebook is partly because investors expect it to grow substantially, at least in the short term. The fact that it's growth is lower than that of it's direct competitors (who have a much lower P/E) is not a good sign for the stock in days to come.
- taligent 14y ago
  But again. Google is diversified beyond just advertising whilst Facebook isn't. It seems illogical to just blindly compare total revenues. Why not compare Facebook/Google to Apple then since they are also vying for the same piece of the pie ? Or News Corp ? Or Vogue magazine ? Or Playboy ?
wutbrodo 14y ago
The way that valuation of a company works is that the multiple of market cap over annual revenue is supposed to reflect (mainly) expectations of growth. This multiple for Google is less than Facebook's by a LOT, because Google, as a relatively mature company working off of a larger revenue base, is expected to grow more slowly percentage-wise, all else held equal (this has been borne out by the vast majority of companies, and is pretty much common sense, as doubling sales is a lot harder to do when one is already doing tens of billions of dollars in sales). The fact that Facebook is growing more slowly than a company with much lower expectations of growth instead of living up to its expectations of hypergrowth (as implied by the valuation) is a signal that the current growth expectations (as implied by the valuation) are too high (hence the "all else held equal" part of the last paragraph: if a company isn't performing as well as it should, then it's of course possible that it'll grow more slowly than a larger competitor with lower expectations of growth). This of course ignores the possibility that FB comes up with an amazing revenue-boosting innovation like AdWords and begins to fulfill their expected growth rate. Things like "search advertising has different dynamics to [sic] social advertising" can't just be completely removed from consideration. They're precisely what determine if Facebook is inaccurately valued or if the huge growth expected from it will occur/continue.

jonknee 14y ago

Google's market cap is $200B vs Facebook's $57B. It's closer to 4x than 2x. They also make significantly more profit than Facebook does revenue.