FaceBook- If this is true they are toast.

[bmw335xi]

Originally Posted by treasurekidd

Wow, BMW I didn't think posting that would result in such a strong reaction, it was clearly meant to be a tounge-in-cheek take on the whole thing, with some bits of truth mixed in there. I surely didn't think anyone would freak out about it like that.

I wouldn't call it freaking out, more like correcting all the false information the author gave about the WhatsApp deal. The only thing that gets me going is someone saying blatantly false information, while being a cocky _______ like the author.

Originally Posted by treasurekidd

But seriously, who cares if this thing is the fastest growing messaging app in the known universe? Not one of those users is paying so much as one cent to use it! Technically I may be wrong about that, but first year free and .99 cents a year after doesn't exactly sound like it's going to pay back that $19 billion dollar price tag any time soon.

The author made it sound like Zuck is an idiot that thought, "geeeee I want to pay hundreds of millions per employee, deeeee daaaa deeeee." It's kind of important to mention it grew faster than Twitter and Facebook and that it continues to grow at hyper speed. It's obvious the author didn't do any research and just started typing or he is hoping that his readers didn't do any research themselves.

Originally Posted by treasurekidd

Yes, I realize that it's all about advertizing to these users and selling their personal info to bring in money, but, and this is just my opinion, that is simply NOT a long term viable business plan. $19 billion to advertize to a crowd that's mostly kids who have no money anyway? You're going to have to sell quite a lot of email address lists to justify that purchase. Can you imagine the reaction government regulators would have if a bank like Bank Of America or JP Morgan tried to spend $19 billion to aquire some new online bank that was losing money? I don't think they'd entertain the idea for one minute, regardless of how many users this new bank was "advertizing" to. They'd probably insist that the CEO resign after suggesting an aquisition like that! Who knows, maybe WhatsApp will turn out to be a great aquisition for Facebook, or maybe it won't. But to pay $19 billion dollars for it, which values it at almost double the value of companies such as SWK, CLX, SJM or CPB, is quite frankly, INSANE.

Once again, WhatsApp will only help Facebook, just like Instagram. It's very old thinking that young people don't spend money nor have money. I guarantee you the billions of dollars earned by tech companies doesn't come from 60+ year olds. The majority of the people buying iPhones weren't 60 year olds. Most marketing campaigns aren't trying to target 60 year olds either. Young people spend a lot and are the most tech savy in society. With that being said, WhatsApp goes far beyond teenagers. It's primarily used as a method to talk to friends and family from country to country.

Originally Posted by treasurekidd

And yes, I know Amazon stock price keeps going up, until the next "earnings" report that is, when they announce ever increasing revenues and still more and more losses. Then it tanks again, and slowly works it's way back up in anticipation of the next "earnings" report. And I use the term "earnings" report very loosely in Amazon's case. I don't care how much crap you're selling, if you're not profiting, I'm not investing.

You should understand there are many out there who are investing. You shouldn't ignore a company that has billions upon billions in sales. A company that is changing the way people buy products like never before. I don't own AMZN stock, but I wouldn't talk someone out of owning it if they wanted to.

Originally Posted by treasurekidd

Trade these things up and down all day if you want, I hope you make a ton of money doing it, but that's not my game. Sooner or later, all of these so called internet/social media growth stocks are going to be expected to justify their high valuations with the only thing that matters - earnings. When that happens, all of their smoke and mirror pipe dreams are going to end up priced at exactly what they are worth. Heck, look at Apple. Apple was going to $800, to $1000, to $1,200, higher and higher and higher, until it didn't. When Apple was at it's peak of what, $700 something, I was telling everyone it was fairly valued at around $490 or so - not too far off todays actual price, and right about in the middle of it's current 52 week range. And Apple is one of the worlds most profitable companies, and it still couldn't keep up with the growth expectations all you growth and momentum types kept placing on it - no company can. Apple is currently valued in line with what it's actual earnings dictate, and sooner or later, all of these other stocks will be too.

It's true a company will eventually have to justify its valuation and that usually happens when growth starts to stall. When it comes to AAPL, a momentum person would have got out pretty fast as it was falling. A fundamental person stayed in and I did that until they reported Q1 2013 earnings. If I was trading based on technicals and momentum, I would have got out a lot earlier. That's one reason why I ignore fundamentals for the most part and stick with just the technicals. The market is very irrational, so to trying to rationalize it will just give you headaches.

Originally Posted by treasurekidd

I recognize all of this for what it's worth, and I know you do too, BMW, but I fear that there are a lot of people out there who don't, people who view these companies as viable long term investments who will end up getting badly burned as these issues mature, just like the last dot com bust. I remember what became of the first generation of "wave of the future" stocks like AOL, Lycos, Nortel and Worldcom, and that's why I preach so strongly against investing in these today.

There have been horror stories with trust worthy companies as well. Some of them went belly up, while others are still off their previous highs. I'm a firm believer in investing based on technicals. It brings order to a chaotic market. You'll know when to get out of a stock before you sustain big losses. You will also get to benefit from these high flyers on their way up.

[John23]

I'm still very bearish on FB.

-I look at the quote today, $69.80 a share. $177.97 billion market cap!! That is serious coin.

By contrast, a long established technology company like oracle, has $174 billion market cap. They have $37 billion in revenue, ebitda of $16. FB has $7.8 billion in revenue, 3.93 in ebitda.

I think a fatal flaw with these internet businesses is this idea that new users are worth ANY PRICE. If X company has 200 million users, (and they are on the internet), they must be worth so much per person. Why don't other industries think like this? Like treasure kidd points out, banks don't think like that.

There seems to be this idea that advertising and collecting data on people is the holy grail. Those two things have turned over the laws of capitalism, and you can just print money ad infinitum.

I think the internet is somewhat analogous to the car industry when it started or air travel. The first few car companies had lots of "data" about their customers vs the horse and buggy days. Seeing the car production line in 1912 was probably just as exciting as seeing whatsapp users growth today. "New", "exciting", "limitless possibility", etc.

Another comparison is with computer or semi conductor companies in the 80's. Lots of "growth", "excitement".

[saxondale351]

I am not a fan of tech stocks. Many are a passing fad. I know some say not with FB but 8 years ago many would have said the same of My Space. They really don't produce much that someone else can not do better. I prefer the steady gains of good quality stocks like JCI,PG and others. Not fast gains but not fast losses either.

[treasurekidd]

I prefer the steady gains of good quality stocks like JCI,PG and others. Not fast gains but not fast losses either.

That's right, buy them when they're on sale, collect dividends while you wait for the market to price them correctly, and let the power of compounding be your friend. That's my get rich slow plan, lol. JCI is a GREAT company, by the way.

[Bulldogdad]

My two highschool teen daughters lost interest in Facebook early last year. I'm thinking myspace within 5yrs unless they stay ahead of the curve.