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  1. #1
    Master Member vinayakm's Avatar

    The Facebook (FB) thread !!!

    I am pretty convinced that a monthly or weekly put is what I will have to do and I am just waiting for the earnings report for confirmation. FB did have $1.09B in revenues, but the social network has a very expensive valuation and an extremely high P/E which I don't think it will be able to justify by growing fast enough.

    The mobile ad strategy has worked out fairly well with 14% of revenues coming from that avenue, but it poses its own problems. Google (GOOG has the edge when it comes to gaming on mobile devices as opposed to FB with its hegemony on desktop and laptop games.

    There are fewer ads that can be shown on a mobile device and fewer ads make it to the news feed affecting the CPM. Talking about the CPM, developed countries with CPC and CPM rates such as the US, UK and Canada are seeing declining numbers of monthly users.

    Looking forward to seeing your thoughts on the overly hyped Social Network!

  2. #2
    Rookie Member
    Facebook with his 67B capitalization is so overpriced that it will not be able to reach fair price in the next couple of years. I also could play with puts, but we have to be cautious for the market hype. There is a real risk that Facebook could be inflated even further at least to its initial post IPO price of 38$.

  3. #3
    Master Member vinayakm's Avatar
    One thing is for sure: when it comes to promotions and stuff, FB seems to be the best social network in terms of active users. It will be interesting to see how innovations like the graph search and FB adding credit cards for gifts and other monetization techniques will work out for the social media giant.

    Getting credit card information is a big asset for companies like Facebook as they are then able to provide valuable insights about customers to companies that want to sell to them or advertise.

    I mean I was optimistic about Amazon (AMZN), so I should be fair and give FB a chance too!

  4. #4
    Specialist Member marvel's Avatar
    Facebook really have a great potential in terms of user experience and active users, but it struggles in generating more revenue. The Google model for profit generation like Adsence is no possible with Facebook. They really have some advertising space but it is encapsulated inside the Facebook pages only and I don’t think a lot of users will pay for virtual gifts, which looks like pictures on the screen. There is a great potential in the virtual world economy. I am a big fan of second life for example, but it is too premature yet and Facebook is far from the level to be able to give full virtual reality to its users.

  5. #5
    Veteran Member uj.forex's Avatar
    Google and Apple are no more the most trustworthy companies as I read it in news, so Facebook might probably get an edge of it and compete with them... I could see its share price rising this year... at least back to its IPO price...

  6. #6
    Master Member vinayakm's Avatar
    Sounds like I was right about Facebook (FB). The stock has been having a rough time as of late.


    The 100-day MA (moving average) chart in the main panel shows that FB stock worth buying binary option calls on. However, other technical indicators paint a different picture.
    The MACD shows a bearish crossover indicating that it is time to sell. Binary traders will note that it is close to zero and so puts are in order since the short-term average is below the long-term average, signifying downward momentum.

  7. #7
    Solid Member Peter Green's Avatar
    Good job again vinayakm! It really seems that you are right about current situation with Facebook. It looks that there are enough bearish indications for a short term put purchase, but what do you think about the longer term company valuation. Is it fair value or under or overvalued? You already give some good points for that kind of discussion. Facebook is the most used and most active social network in the world. I also spend several hours a week there and I know that it has a great potential, but the revenue schemes that are available now didn’t look sustainable. The Facebook guys should adopt new strategy and new model if they want to grow the business not only to survive as the biggest social network in the world.

  8. #8
    Rookie Member
    Facebook want you to pay 7$ for promoting your posts higher on the walls of your friends. That ridiculous.. and I think it is not good at all. It shows that Facebook is hunting for every possible way to generate more profits, but if that type of hunting for profits become unsuccessful it will be a great disaster for the biggest social network.

  9. #9
    M.J
    M.J is offline
    Veteran Member M.J's Avatar
    Quote Originally Posted by pepermind View Post
    Facebook want you to pay 7$ for promoting your posts higher on the walls of your friends. That ridiculous.. and I think it is not good at all. It shows that Facebook is hunting for every possible way to generate more profits, but if that type of hunting for profits become unsuccessful it will be a great disaster for the biggest social network.
    Well, for every such step, high level of criticism is faced. But why a company, with prime objective of increasing profit, leave earning opportunities. So it was an opportunity to increase revenue and they did it. And there is always a possibility of unsuccessful marketing and failure of project but its affect on FB depends on how much FB is depending on it.
    Last edited by M.J; 02-17-2013 at 03:49 PM.

  10. #10
    Master Member vinayakm's Avatar
    Quote Originally Posted by Peter Green View Post
    Good job again vinayakm! It really seems that you are right about current situation with Facebook. It looks that there are enough bearish indications for a short term put purchase, but what do you think about the longer term company valuation. Is it fair value or under or overvalued? You already give some good points for that kind of discussion. Facebook is the most used and most active social network in the world. I also spend several hours a week there and I know that it has a great potential, but the revenue schemes that are available now didn’t look sustainable. The Facebook guys should adopt new strategy and new model if they want to grow the business not only to survive as the biggest social network in the world.
    I really think the social network is overvalued given the declining usage been seen in the developed countries where CPC and CPM are the highest. Most developing countries (emerging markets you could say) don't provide much for advertising revenues. FB is a one trick pony for now, but with graph search and other innovations FB could be the next Amazon. There is also the information that it has about customers that makes FB so valuable to various companies.

    Quote Originally Posted by pepermind View Post
    Facebook want you to pay 7$ for promoting your posts higher on the walls of your friends.
    I know this is a contentious issue as of now, but I personally see no problem with it whatsoever.

    Quote Originally Posted by M.J View Post
    Well, for every such step, high level of criticism is faced. But why a company, with prime objective of increasing profit, leave earning opportunities. So it was an opportunity to increase revenue and they did it. And there is always a possibility of unsuccessful marketing and failure of project but its affect on FB depends on how much FB is depending on it.
    Agreed.

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