AllFacebook - Latest Comments in Is Facebook Overvalued?

Re: Is Facebook Overvalued?

Craig Lu — Fri, 26 Oct 2007 13:48:05 -0000

"1. Growth to 200 million active users
2. Powering 18 to 36 billion web searchs in 2008 and 2009 which will generate $2 and $4 billion in Cost Per Click Keyword-driven (i.e., Google-style Text Link) ads
3. Offering a Facebook Mall with 1,000 top merchants each paying $1 million per year in base rent plus 5% of Gross Sales in Overage Rent"

Hahaha...that is really funny...right now..does anyone know how many total users Facebook has? 50 million or less? and how many of those are active? and how many of the active users are clicking on ads?

Ads...on facebook are not generating significant revenue. If they did, they will definately brag about it. Currently they are not even releasing their CTR, which is comical hearing people saying Facebook will take down Google.

People go to Facebook not to search or look for businesses. People go to Facebook to socialize. So naturally you are not going to generate a lot of CTR. To make things worst, the younger computer savvy crowd have trained their eyes to automatically ignore ads on websites. How many times any of you have clicked on an ad on facebook? Zero to less than 3? Facebook is a hype carefully crafted by investors who are trying to take advantage of gullible people. It will not last that long.

Re: Is Facebook Overvalued?

erikn — Fri, 26 Oct 2007 11:00:05 -0000

I disagree that facebook provides "laser guided marketing".
I do think that it is nice that you can provide some extra value by advertising say a new rock album to someone who has declared themselves to be a U2 fan. However, facebook still has a problem of intent. The problem is that when most people come to facebook they are there to read the feeds, catch up with people and have social interactions. When they are looking to buy something, they are usually going to a search property or something like Amazon/Ebay. It's unclear to me that facebook, by providing a search box/shopping place will be able to get people to perform this kind of context switch. I'm not saying that there won't be some overflow, just that the talk of $100bn valuations is basically masterbatory at this point.

Re: Is Facebook Overvalued?

The Pageman — Fri, 26 Oct 2007 00:15:49 -0000

“The value of a social network is defined not only by who’s on it, but by who’s excluded.”

exactly. that's the difference/value of being in aSmallWorld.net and aBigWorld.net :)

Re: Is Facebook Overvalued?

E Dewhirst — Thu, 25 Oct 2007 23:29:02 -0000

I am with Lee on this one - MSN search may suck but this is the time of the land grab and they just got some serious location on the board. Google stock is undervalued right now - they are going to show some serious earnings in the next quarter. Bottom line - print and TV advertising is losing big time and with Facebook providing laser guided marketing - it is every product pushers wet dream!

580 million for MySpace! how absurd - fast forward 27 months - that is a sweet bargain for News Corp - times they are a changin!

Cheers,

Eric

Re: Is Facebook Overvalued?

erikn — Thu, 25 Oct 2007 20:41:00 -0000

$100bn IPO, are you serious?

Basically all the value would come from contextual search advertising presumably provided by MSFT. Let's not forget that
1) MSN search sucks
2) MSN has FAR fewer advertisers than Google/Yahoo

This means that users will probably be disatified which such a search if it launches AND that they will have a harder time monetizing each query than if they chose another partner.

It's unclear to me that MSN could change either of these factors even by 2009.

Re: Is Facebook Overvalued?

Lee Lorenzen — Thu, 25 Oct 2007 17:44:52 -0000

As I've written, Microsoft Expects a 7x Return on Their Recent Facebook Investment:

http://blog.adonomics.com/2007/10/24/microsoft-...

The value will come from three things:

1. Growth to 200 million active users
2. Powering 18 to 36 billion web searchs in 2008 and 2009 which will generate $2 and $4 billion in Cost Per Click Keyword-driven (i.e., Google-style Text Link) ads
3. Offering a Facebook Mall with 1,000 top merchants each paying $1 million per year in base rent plus 5% of Gross Sales in Overage Rent

This gets facebook to a $100 billion IPO at between 25 and 50 PE ratio (depending on how soon they go out).

It doesn't take much execution or any new inventions to enable these huge new sources of revenue.

Thanks,
Lee

Re: Is Facebook Overvalued?

Ryan Miller — Thu, 25 Oct 2007 14:09:17 -0000

I think it was a good bet simply because another loss to Google would have been a death blow to MSFT's online strategy. It's obviously hard to justify the multiple based on what we know now, but I'm willing to bet that MSFT knows more about Facebook's monetization strategy than we all do.