Seeking Alpha

The Facebook (FB) valuation debate (I, II, III) continues. Mark Gimein notes that even at $75B,...

The Facebook (FB) valuation debate (I, II, III) continues. Mark Gimein notes that even at $75B, Facebook is valued at $89 per monthly user, in spite of generating annual revenue of just $5.02/user. The 17x ratio between the numbers easily outdistances GRPN's 8.3x, never mind NFLX's 2x. Though the fact Facebook still produces so little revenue per user, in spite of owning volumes of user data, suggests it has plenty of room to improve monetization. (more)
Comments (5)
  • maybe, but it built the culture on limited intrusion meaning that users will jump ship if more ads show up. Valuing the company based on such increases is very premature.
    2 Feb 2012, 11:52 AM Reply Like
  • Users, users, users that’s the most repeated word when talking about FB. They don’t own the users neither they own the information about them. All internet businesses based on users have failed strepitously or they are run at a lost.

     

    Google: they don’t have users, they are more of an ecosystem plus they have real assets. People think that their strength is only software but they have serious competitive advantages on hardware too.

     

    Amazon, Dell: top notch supply chain, data mining, AWS, Kindle, real assets.

     

    AOL: users, users, users.

     

    Hotmail: users, users, users

     

    And a long etc.

     

    User metrics will only work on very niche businesses and in any case it will never justify FB multiples.
    2 Feb 2012, 12:40 PM Reply Like
  • Profit= Revenue per subscriber- cost of acquiring revenue

     

    Factor that in and then celebrate netflix and groupon
    2 Feb 2012, 01:07 PM Reply Like
  • People don't go to FB to shop or ask for information like Google. And the users already complain about FB messing with the experience.

     

    And a lot of FB users are kids with no money anyways. They mostly want to show off themselves at parties doing stupid things or show themselves in bathroom shots or in bikinis. Or talking about their life philosophy based on zero years of experience. Sorry for the sidebar.
    2 Feb 2012, 01:34 PM Reply Like
  • Agreed on the sentiment that further monetization of the user base will cause an exodus from the site.

     

    The company has over 10% of the WORLD population already on the site, they are reaching a saturation point and any further efforts to capitalize on their user base will cause a shrinking of said base.

     

    Whether or not they can capitalize enough to accomodate the user exodus I would probably side with the not side of the fence.
    3 Feb 2012, 08:29 AM Reply Like
DJIA (DIA) S&P 500 (SPY)