Are we witnessing an ' e-bubble ' ?

Delancey

Amid all the hype about the Facebook IPO I can'thelp but wonder are we seeing another bubble ? A valuation in excess of 100 billion dollars seems ludicrous and of course with Google valued in excess of 200 billion one has to question the ability of these companies to justify these valuations.

In the dot.com bubble everything was driven by '' potential '' earnings and profits , that virtually none of these businesses even came close to achieving this potential seems to be forgotten . Listening to the news today all the talk is about '' potential and prospects '' - are we back to the future ?

I am pie

Delancey wrote: »

Amid all the hype about the Facebook IPO I can'thelp but wonder are we seeing another bubble ? A valuation in excess of 100 billion dollars seems ludicrous and of course with Google valued in excess of 200 billion one has to question the ability of these companies to justify these valuations.

In the dot.com bubble everything was driven by '' potential '' earnings and profits , that virtually none of these businesses even came close to achieving this potential seems to be forgotten . Listening to the news today all the talk is about '' potential and prospects '' - are we back to the future ?

Isn't it really just Facebook ? That's not really representative of a bubble, just one serious over valued company.

Not a bubble.

tricky D

It's currently working off revenues of $3.71 billion and a valuation of $104 billion, giving a ratio of 28, which while a bit high is nothing compared to the ratios around the time of the dot com bubble bursting. The average would be around 15 and Apple were at 25 2 years ago. Baltimore Technologies when the collapse started to happen was working off between 150 and 160 which was typical of companies which went bust.

earpiece

Personally I can't get my head around the whole Facebook thing.... I have no interest in what folk had for breakfast and the like....
I'd say it's days are numbered, and it'll just be a loss in the long term for it's investors.

Idbatterim

Amid all the hype about the Facebook IPO I can'thelp but wonder are we seeing another bubble ? A valuation in excess of 100 billion dollars seems ludicrous and of course with Google valued in excess of 200 billion one has to question the ability of these companies to justify these valuations.

http://www.independent.ie/national-news/bono-is-a-billionaire-thanks-to-facebooks-record-breaking-stock-market-debut-3111508.html

the company I work for currently have a small advertising campaign on facebook and it WILL NOT be renewed. The only main way they have to generate revenue is advertising, I dont take any notice of their ads, for me they are a necessary evil in my facebook experience. Look how bebo went a few years back and then myspace. If I see an ad on facebook and think, I might be interested in that service, first thing I do? google it...

seamus

There's a little bit of an IT hype bubble going on at the moment, particularly around development of apps for mobile devices.

While on one hand there's a legitimate rush from large websites to make mobile versions of their sites, there's also a bit of PR/marketing fluffing going on where companies are rushing to create mobile apps despite not really knowing what they are or why you would use one. In the same way that many companies are told they need facebook pages and twitter accounts but they don't really know why.

Companies are ploughing money into developing "apps" and it will bite a lot of them in the ass.

That is of course entirely separate to the facebook issue. Facebook's IPO has been hyped up because its runaway success has had people chomping at the bit to buy a piece of it for the last 3 years. So there's a tonne of pent-up demand for facebook shares, which means we'll probably see a fairly swift snapback of the share price.

Lantus

people hate advertising.

and the Fb value is IMHO grossly overvalued fuelled by hype and a mistaken belief that FB represents more than it actually is.

MadsL

We have seen nothing yet from FB's potential revenue stream. Put it this way, if you had a database that tracked everything that pretty much most of the affluent first world actually did with their lives (and that you had managed to convince the individuals to freely give to you) how much would that be worth to you.

For example; it is a widely held axiom that 90% of advertising is a waste of time and money, but that no-one knows where the 10% is.

With the era of FB, advertisers can hit a chosen profile with laser guided accuracy.

Lets say your demographic is;

Straight Single 20-23 year employed Christian girls who wear Ugg boots and play tennis that live in the zip code 92067 in San Diego, who graduated High School and recently attended a Beyoncé gig.

Only Facebook gets you that close to your target market (ridiculously specific demographic, but nonetheless achievable) not only that, but the saps will also post to let you know they have bought your product.

Now take your cheque book Nike, Adidas, Sony, Apple etc How much do you suppose they will pay for that data-mining and targeted advertising?

We have not seen a hundredth of the profits FB will make. (Of course, it will crash and burn horribly eventually)

kennyb3

A post elsewhere put it best for me:

'The global advertising market is worth 1 trillion. Facebook is now valued at 10% of that.

Does not, to my mind, compute. I use facebook but I have never, directly or indirectly, bought a product through it - other sites I have - but never Facebook - yes my data is use for tageted sales but I can't see the value (or at least that level of value).'

Suryavarman

I am pie wrote: »

Isn't it really just Facebook ? That's not really representative of a bubble, just one serious over valued company.

Not a bubble.

Groupon, LinkedIn, Yelp, Zynga and Renren all went public in the last year. I'm sure there is a few other websites after going public recently or will in the near future as well. There is plenty of evidence to support the bubble thesis.

MadsL

MadsL wrote: »

We have seen nothing yet from FB's potential revenue stream. Put it this way, if you had a database that tracked everything that pretty much most of the affluent first world actually did with their lives (and that you had managed to convince the individuals to freely give to you) how much would that be worth to you.

For example; it is a widely held axiom that 90% of advertising is a waste of time and money, but that no-one knows where the 10% is.

With the era of FB, advertisers can hit a chosen profile with laser guided accuracy.

Lets say your demographic is;

Straight Single 20-23 year employed Christian girls who wear Ugg boots and play tennis that live in the zip code 92067 in San Diego, who graduated High School and recently attended a Beyoncé gig.

Only Facebook gets you that close to your target market (ridiculously specific demographic, but nonetheless achievable) not only that, but the saps will also post to let you know they have bought your product.

Now take your cheque book Nike, Adidas, Sony, Apple etc How much do you suppose they will pay for that data-mining and targeted advertising?

We have not seen a hundredth of the profits FB will make. (Of course, it will crash and burn horribly eventually)

Well said. To misunderstand facebook is easy if you're viewing it as just a website. It's more than that - it's ingrained into western psyche as the byword for sharing your life with friends. If it can been used to overthrow governments - it can be used to sell you ****.

Delancey

Despite the plethora of possibilities opened up by the Internet is it not fair to say that many companies have failed to convert all this potential into hard profits ?
As someone said '' nobody likes advertising '' and I remain to be convinced that a company with a market value over 100 billion dollars will justify that value when its business model is solely predicated on advertising revenue.

I was interested to read that General Motors plans to cease advertising with Facebook.

Perhaps its just the same buzzwords I recall from the dot.com bubble '' exciting potential '' , '' skys the limit '' , '' the future '' etc - these words give me a shivery feeling..........

ardmacha

As someone said '' nobody likes advertising '' and I remain to be convinced that a company with a market value over 100 billion dollars will justify that value when its business model is solely predicated on advertising revenue

Facebook has 858 million users. You only have to get a few Euro of revenue from each of these to justify the valuation. Facebook will sell itself as a one stop shop for peoples e-business and they just might succeed.

AlmightyCushion

Delancey wrote: »

Despite the plethora of possibilities opened up by the Internet is it not fair to say that many companies have failed to convert all this potential into hard profits ?
As someone said '' nobody likes advertising '' and I remain to be convinced that a company with a market value over 100 billion dollars will justify that value when its business model is solely predicated on advertising revenue.

I was interested to read that General Motors plans to cease advertising with Facebook.

Perhaps its just the same buzzwords I recall from the dot.com bubble '' exciting potential '' , '' skys the limit '' , '' the future '' etc - these words give me a shivery feeling..........

Google are an advertising company and they're valued at $200b, although they have the revenue and profit to back it up.

MadsL

syklops wrote: »

I never bought anything from Boards.ie, but they run ads. In my mind, the amount of money that is spent on advertising is ridiculous, and thats where Facebook get their money from.

I mean do Coke still need to advertise? Do they not pretty much own cola, followed a long way off by Pepsi? Surely an ad at christmas would cover them?

You seem to be struggling with the concept of brand awareness. The question is more "Have you ever bought anything advertised on Boards.ie?"

Actually, Coke only have 25% of the global cola market. Pepsi have 10%. Not exactly 'owning' cola. Personally, I prefer diet Dr Pepper.

syklops

MadsL wrote: »

You seem to be struggling with the concept of brand awareness. The question is more "Have you ever bought anything advertised on Boards.ie?"

I understand brand awareness perfectly fine. I was responding to the guy who said he had never bought anything on facebook.

MadsL wrote: »

Actually, Coke only have 25% of the global cola market. Pepsi have 10%. Not exactly 'owning' cola. Personally, I prefer diet Dr Pepper.

So you agree they are the brand leader? Good.

who what when

Big difference between brand leader and 'owning' a brand!

syklops

who what when wrote: »

Big difference between brand leader and 'owning' a brand!

Fine forget I said anything.

I do agree with Skylops in that I find it strange that Coke continue to advertise so heavily. Clearly the leader in their area, and massively known globally, it seems odd to keep investing in advertising so much.

msg11

I was thinking the same yesterday. But wasn't the bubble based on a vast amount of websites. This bubble is just a Facebook bubble if you want to call it.

I can't see Facebook crashing it will still be around in 20 years, it just won't have as many users.

Personally Facebook need to start sailing the ship in new directions, I can't see why they don't get a search engine on the go and start launching stuff on there platform. They have the infrastructure and money at this stage.

This social media stuff is not sustainable look at bebo etc.. They need the Facebook profile to be the hub and spoke out from it to other stuff and deliver product and profit.

GetWithIt

ardmacha wrote: »

Facebook has 858 million users. You only have to get a few Euro of revenue from each of these to justify the valuation. Facebook will sell itself as a one stop shop for peoples e-business and they just might succeed.

When you've already IPO'd for 100 Billion it's a little late for figuring out what kind of company you're going to be, how you're going to monetize your customer base.

What you're describing is a start up.

Max_Charger

msg11 wrote: »

I was thinking the same yesterday. But wasn't the bubble based on a vast amount of websites. This bubble is just a Facebook bubble if you want to call it.

I can't see Facebook crashing it will still be around in 20 years, it just won't have as many users.

Personally Facebook need to start sailing the ship in new directions, I can't see why they don't get a search engine on the go and start launching stuff on there platform. They have the infrastructure and money at this stage.

This social media stuff is not sustainable look at bebo etc.. They need the Facebook profile to be the hub and spoke out from it to other stuff and deliver product and profit.

Bingo I'm willing to wager Facebook will have its hands in a few pie's by the end of 2012. As i said somewhere else, they didn't buy all the hardware patents off IBM for the fun of it. Does anyone else not think that the fall of myspace, bebo etc is actually going to help them? They know exactly where the mistakes where made and to learn from it.

Max_Charger

Max_Charger wrote: »

They know exactly where the mistakes where made and to learn from it.

I don't think they do know where the mistakes were made to be honest. Facebook seem to have an update every so often (timeline being the most recent) that just puts people off using it.

Simple and straight-forward is what people want. Bebo went down the tubes when they started getting too complex, and there's no doubt facebook will do the same.

People don't like change, so once a much simpler social media site appears, I reckon Facebook will fade out into obscurity.

I'd imagine that if Google+ didn't start off with unnecessary complicated nonsense (circles and such) then it'd have gotten a bigger user base by now, too.


Just my own opinion though.

Grecco

Google+ had a mountain to climb against Facebook, the one thing in Google+`s favour is Android. With every update Google+ is becoming very functional, for example when you snap a pic off your mobile it seamlessly gets to your Google+ account. Soon you`ll be using it more and more and you won't even realise it!!
As for Facebook going into search engines -- thats gone, done and dusted
and you can now look to cloud based computing as the current big thing and guess whos the leader in that space -- Google
So with Apple dominating the premium phone/computing/software sectors what does that leave for Facebook??


Given 3 companies to buy shares in which of the three would you choose ??

Apple
Google
Facebook

I know which one I wouldn't touch :rolleyes:

SerialComplaint

MadsL wrote: »

With the era of FB, advertisers can hit a chosen profile with laser guided accuracy.

Lets say your demographic is;

Straight Single 20-23 year employed Christian girls who wear Ugg boots and play tennis that live in the zip code 92067 in San Diego, who graduated High School and recently attended a Beyoncé gig.

Only Facebook gets you that close to your target market (ridiculously specific demographic, but nonetheless achievable) not only that, but the saps will also post to let you know they have bought your product.

Last time I placed a FB add a couple of years back, it was not possible to be that selective at all about the demographics. I couldn't pick a specific area in Dublin. I couldn't pick generic terms (like Ugg or Beyonce from your example) - I could only pick from a set of generic terms, none of which were helpful for my particular event.

Has it improved much since then?

maninasia

Deleted User wrote: »

I do agree with Skylops in that I find it strange that Coke continue to advertise so heavily. Clearly the leader in their area, and massively known globally, it seems odd to keep investing in advertising so much.

It's a consumer product, there are always new consumers to think of i.e. kids.
Also they want 'Coke' to be in your head when you are thirsty or in the supermarket, it is actually a form of hypnosis.

mike65

IPO gets black eye

http://www.guardian.co.uk/commentisfree/cifamerica/2012/may/23/facebook-ipo-debacle-greed-hubris-incompetence

Duggys Housemate

I think Facebook is over valued but not extraordinarily so. A survivor of the last tech bubble, Amazon, has a crazy P/E, always around 100. What is the market pricing in?