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No offense, but you hardly sound like an expert to me too. Given your defensive position on fb, I'm going to go ahead and assume you own a few shares of fb (or you are contemplating buying) and it pisses you off to see anyone say anything negative about your psychological position.

Think real hard about why it bothers you when a stranger says negative things about fb. Be careful about closing yourself off to those who take opposing positions. Egos will want to remain consistent with past choices, but the world evolves and changes constantly.

Shut off the ego and shut off the emotions. Listen to others opinions then go and do what you feel is right. Opinions are water under the bridge.

You shouldn't be tiring of any opinions if you are a serious investor. Many analysts have fb pegged at near $15. If they are all wrong, then you don't have to try to convince others that everyone is wrong, just go into the market and buy as much stock as possible and just wait for the efficiency of the market to catch up. FREE MONEY...if you're right :)

I'm certainly no expert when it comes to evaluation of a company. These are merely my thoughts as a tech geek and developer. When Google IPO'd some experts made claims that ( I am paraphrasing here), Google is entering a crowded Search market and the real money was in portals.

As a geek , I fully grasp Facebook's 12.24 pages/visit stat. Even Reddit is just a hair below, at 10.6. (source: Alexa). That type of engagement is insanely hard to get for a site as big as Facebook. Investors do not look at these things because they do not understand what they mean. They look at traditional investor metrics.

If Facebook included ONE banner ad across the top of their pages, their revenue would soar. They are choosing their own path and are paying the price for it right now. Time will tell if their method will work out.

What I do know is that investors are a finicky bunch. When Zuck spoke at Disrupt 2 weeks ago investors decided to buy Facebook and it rose 4 dollars since then. The reality is nothing had changed, but in their eyes it just looked better. Fair enough, that is how the game is played.

If an investment firms evaluates traditional companies like Borders, Best Buy, or Radioshack then I would not even question their expertise. They are a very knowledgeable bunch when it comes to traditional companies.

However I do not believe their analysis of the tech companies that exist on the internet is as accurate, simply because they do not fully understand the industry and web.

The biggest red flag that I see when it comes to fb stock is that it has single digit institutional ownership. Even yahoo has 75% institutional ownership. Fb has like 7% IO. Big money is staying away from fb and that is a huuuuge red flag.

Institutional ownership is a vote of confidence for the long haul. Mutual funds and pension funds buy long and cannot participate in short selling.

Big money knows something about fb long term prospects that all of us don't. I don't know what that is but their actions speak louder than anybody's opinions can.

Has FB sold enough stock for IOs to get a double-digit percentage? Zuck alone is controlling over 50%, thanks to Andreeson. A more interesting question is, of the stock that's been made publicly available, what percentage was purchased by IOs?

(FWIW, I wouldn't touch FB right now, either. There are a couple of high risk issues I think they have to deal with, and I'm not sure they will come through unscathed.)

The 1990s tech bubble was all about those "non-traditional" metrics like page views and "eyeballs". Turns out they are a horrible predictor of the intrinsic value of a company. So investors went back to the boring, old metrics that, regardless of industry, seem to be able to provide some true indication of the health and value of a company.

I will agree that Google and Apple aren't the right companies to compare FB with. But FB is having mobile problems, and Apple and Google do seem to have reasonable mobile strategies, so I can understand why analysts do that.

> As a geek , I fully grasp Facebook's 12.24 pages/visit stat. Even Reddit is just a hair below, at 10.6. (source: Alexa). That type of engagement is insanely hard to get for a site as big as Facebook. Investors do not look at these things because they do not understand what they mean. They look at traditional investor metrics.

I think they grasp it. The reality is when it comes to financial matters, engagement isn't the only (or even most important) metric. In fact, it doesn't matter squat if you can't monetize it. And that's exactly the stumbling block FB has run into.

You can retort engagement is important because it's a sign of a happy user & monetization shouldn't matter. Which is fine, but then the stock price shouldn't matter either.

So you admit that you're not an expert in evaluating companies and think that analysts are only qualified to evaluate brick and mortar retail companies, and on that basis $15 per share sounds too low?

Let me give you a tip: Professional investors absolutely understand the value of pageveiws and engagement and all that fun stuff. It's why facebook was able to basically name their multiple with the IPO underwriters and it was the biggest offering in history.

However, when the rubber meets the road, it is simply not the most important metric nor is it any guarantee of long-term future profits (forget about current profitability for the sake of argument.)

Is a TV channel with the highest ratings automatically the best investment? What if their costs are insane? What if they're about to lose some great shows or the popularity of them is waning. Hey, it's the most popular station, so it has to be worth the most, right?? To say otherwise isn't an issue of not "getting it," it's a matter of understanding that business is business whether we're talking websites, widgets, or retail.

I wonder if Wallstreet fully grasps what Facebook is all about and how it fits into the grand scheme of things. Perhaps looking at traditional markers for evaluating a company like Facebook isn't working? They fail to realize that Facebook is the most traffic'd website in the world. (According to Alexa: http://www.alexa.com/topsites). Somehow $15 doesn't sound right.

Too young to remember the dotcom boom? If I gave everyone in the world a $1 every time they visited my site I could also have the most traffic'd site in the world, but that wouldn't make my site worth any money.

Of course FB isn't like that, but the point is that traffic is worthless until you can monetize it. IMHO, their biggest problem is monetizing their users without running them away.

FB is not comparable to a dotcom book company.

If I gave everyone in the world a $1 every time they visited my site I could also have the most traffic'd site in the world

Perhaps, but your site would probably not have the marketing treasure-trove that FB has. FB needs to learn how to use it.

> If I gave everyone in the world a $1 every time they visited my site I could also have the most traffic'd site in the world, but that wouldn't make my site worth any money.

Sorry to quibble, but no you couldn't. If you had 7B dollars and you literally made this offer to every person in the world, you still would not get Facebook's traffic.

And in any case, Facebook has a lot more than traffic. Just because their monetization is lackluster so far doesn't mean they don't have a ton of interesting directions to go in. All this hand-wringing and analysts attempting to project a realistic valuation for Facebook is just anguish and sour grapes over being hoodwinked by the hype generated by a bunch of greedy investment bankers.

However if you take all the IPO hoopla out of the equation, and you see that Facebook is still growing, still evolving, and has a lot of unique assets that could propel in the company in new directions. I wouldn't bet against Facebook just because some cranky financial experts want me to believe they know where Facebook is headed. They don't know. Nobody knows.

> Sorry to quibble, but no you couldn't. If you had 7B dollars and you literally made this offer to every person in the world, you still would not get Facebook's traffic.

I'm pretty sure you would. It's a dollar every time they visit the site, not one dollar per person.

>I wouldn't bet against Facebook just because some cranky financial experts want me to believe they know where Facebook is headed. They don't know. Nobody knows.

The last two sentences are precisely why analysts are "cranky" and institutional ownership of this stock is so faint.

A reasonable investor makes an investment decision based on the info they have and the prospect of discounted future cash flows. At this point it is clear not even Facebook management really knows where they're headed. Just where the money is. How does a reasonable investor value that? I wouldn't bet on facebook at any price just because they have critical mass on a free social network today.

Edit: What I meant by the last statement was that valuation matters. Obviously there is a price at which Facebook stock is fair or even undervalued.

I wonder if Wallstreet fully grasps what Facebook is all about and how it fits into the grand scheme of things.

I think I'm with Wall Street.

The danger is that "You don't understand, everything is different now! The old rules don't apply" type thinking sounds like the first dot-com bubble. How do we know if things are different now, or if this is a bubble.

Why doesn't $15 "sound right"? Because it's not 700?

Judging share prices by whether they "sound right" is not good investment advice.

It's all about the number of shares. Google or Apple could be at $15 as well and still have the same market cap.

Rovio excels at monetization on mobile. Same with Popcap. Obviously these companies' mobile products are different than facebook's.

Why is mobile monetization so difficult? Seems like a company that can monetize the desktop experience can do mobile too. They're both computers on which users consume information. If ads work on the desktop then I can't see a reason why they won't work on mobile.

>Why is mobile monetization so difficult? Seems like a company that can monetize the desktop experience can do mobile too.

From the article: The paradigm shift to the app model is unequivocally bad for Facebook, [...] Facebook is designed to be open all the time, to be visited in the gaps of the day or as a platform in its own right, bridging to a variety of activities related to the social network. [...] Why use Facebook to play a game, read an article, manage your photos, stream music, or shop, [...] when you can select a specialized app directly.

How can the shift to mobile possibly reduce volume of FB usage? I see friends and family consuming Facebook trash dozens of times per day on their mobile devices. If anything FB consumption has gone up (at least from my perspective). Look at the review count for the iOS app. That app is extremely popular. So why not just put a banner ad in the app?

Here is my theory, probably wrong but I'll throw it out there:

Traders (as opposed to investors) are besides themselves with annoyance at the way the market is treating Facebook. If you bought at 18 and sold at 22 you made 22% on your investment in about a month. (annualized at 264%, woohoo :-) And yet if you're a trader there aren't any signals or technical stats or any of their other tools that they use to tell you to do this.

I've observed when this happens people lash out and tell the people who bought at 18 they were insane, and that it went to 22 was a fluke of chance, and that FB is crazy. Etc etc.

Except that there is a lot of randomness in the world, and in trading, and as folks have pointed out here repeatedly it is unpredictable by its very nature.

So while FB gyrates it will infuriate the traders, they want consistent rise, or consistent fall, or rise to peak followed by slow fall to minimum. Too bad.

Traffic doesn't pay the bills. At some point, all businesses come down to sell something for less than it costs to make it.

Apple is very good at this in the traditional sense. Google has found a way to sell people who are looking for something to people who are selling that thing.

Facebook? The jury is out. They can capture a lot of attention. Right now, the easiest businesses to compare FB to are TV networks. Unfortunately, people don't really like being interrupted by a few-minute-long commercial break on the internet.

Where is Facebook in 5 years. Either they figure something out, and are huge, they find a small niche profit source, or they go the way of AOL circa Y2k. How you rate the likeliness of these outcomes determines how you should price the stock.

Twitter has almost twice the mobile revenue of Facebook while Facebook has more users on mobile than Twitter has on the entire platform. Best case scenario as an investor, you look at this as an area that needs serious improvement.