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Subject:  Re: $39 - $23 = 40% Loss (so far) Date:  8/14/2012  2:38 PM
Author:  0gre Number:  341 of 1376

I have noticed that folks point to old failures of internet companies and extrapolate. Same arguments were given for Google when it was at $100, $200 etc. Ditto with Ebay and Amazon.

Looking at history and cherry picking the winners as examples is myopic.

Google's marketcap was 10B when they went public and they did it while still small and with a ton of growth ahead of them. Amazon and eBay had similarly small IPOs and were also in the early in their growth cycle. Facebook's market cap is huge... and there is a lot of evidence that suggest their growth has flattened.

Facebook went IPO MUCH later in it's life than any of those companies.

"Facebook is here to stay. It is actually making money. Its penetration in the social fabric is undeniable."

MySpace was a massive market leader with no competition, no-one would have guessed a social network with tens of millions of users would just fold in a six month period of time. They destroyed their user experience trying to monetize their product and users fled from the platform. There were other reasons, but the point is once MySpace 'jumped the shark', it went downhill fast.

"Monetizing abilities are many."

This is the mantra of Facebook investors, but how? As I said before, turning clicks into cash is HARD.

In the first year after they went IPO, Google had quarters where revenue was 4-6 times the previous year's same quarter revenue. They could do this because they were growing user count fast and increasing revenue per users incrementally. Google went public while the internet was still growing quickly and before they had saturated their market.

Given Facebook's recent performance, it certainly doesn't sound like they have cracked that nut and there is no evidence Facebook can post anything like that kind of growth. With 900 million users, their userbase in the is nearing saturation. It's impossible to multiply their userbase by 10 or 20 the way Google did because there simply aren't that many people in the world. Any 'explosive growth' is going to come from milking their revenue per user.

How can Facebook double revenue per user? How can they multiply it by six? If you want to compare Facebook to Google, eBay, and Amazon thats the sort of numbers they have to post.
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