3 ms·

While I don't think Facebook is all that great of a business model, its financial performance is FAR better than say Amazon. Over the last 12 months, FB has do

by rmah 14y ago

While I don't think Facebook is all that great of a business model, its financial performance is FAR better than say Amazon. Over the last 12 months, FB has done $6B in revenues and $500mil in earnings (aka profits). That's a net of 9% or so and is decent but not stellar. Amazon in contrast has done $61B in revenue but lost $40mil. In it's best quarter, it only showed a net income of 1%. Honestly, to say that "Facebook will never make a significant profit" is just silly since it's been doing that for a few years now.

ameyamk 14y ago
You can't compare amazon with facebook. Amazon is fundamentally low margin business. FB can at achieve/ maintain profitability levels of high margin google like ad business. Both companies are investing heavily for the future, and that reflects on their bottom line. The more important metric is revenue growth, and unless bottom line is not too red, generally speaking market is only paying attention to the top line growth.
- dasil003 14y ago
  Why should social be high margin? How do we know it's not fundamentally low margin like Amazon's business? This is the disconnect between Silicon Valley and Wall Street. The OA says that Facebook's profits will never be "significant", yet is completely dismissive of the fact that Facebook has claimed more user time than probably any single company's creation in the history of mankind. If they can do this and making 9 or 10 figure profits then I think it's one of the greatest success stories in the history of capitalism. That is, the theory that capitalism is a way of allocating capital to create value. Ah but if the investors who bought into Goldman Sachs' hype machine don't see their cash return then Facebook must be nothing more than another failed attempt to create something "significant".

3 ms·

While I don't think Facebook is all that great of a business model, its financial performance is FAR better than say Amazon. Over the last 12 months, FB has do

by rmah 14y ago

ameyamk 14y ago
You can't compare amazon with facebook. Amazon is fundamentally low margin business. FB can at achieve/ maintain profitability levels of high margin google like ad business. Both companies are investing heavily for the future, and that reflects on their bottom line. The more important metric is revenue growth, and unless bottom line is not too red, generally speaking market is only paying attention to the top line growth.
- dasil003 14y ago
  Why should social be high margin? How do we know it's not fundamentally low margin like Amazon's business? This is the disconnect between Silicon Valley and Wall Street. The OA says that Facebook's profits will never be "significant", yet is completely dismissive of the fact that Facebook has claimed more user time than probably any single company's creation in the history of mankind. If they can do this and making 9 or 10 figure profits then I think it's one of the greatest success stories in the history of capitalism. That is, the theory that capitalism is a way of allocating capital to create value. Ah but if the investors who bought into Goldman Sachs' hype machine don't see their cash return then Facebook must be nothing more than another failed attempt to create something "significant".