A death spiral already? The new car smell has worn off. And Facebook shares are tanking, a kind of lagging indicator for the drop-off in usage. The early adopters are using less, and too busy to get involved in the games. And when 80% of the use is from 20% of the users….To be fair its summer and usage falls off, but more profound questions are to be asked about the life-cycle of these products. It remains that these information age tech companies are far more profitable than anything that preceded them; Microsoft to General Electric, Google to BP, Apple to Ford Motor. No competition on ant metric whether return on investment, earnings or market to book value. Its the winning template, whereby a GE or Ford has to actually make something, an Apple can virtually sell music with no plant, inventory, labor, etc.
But in the latter instances, the volatility is enormous, Google was never designed for search and was bamboozled by Facebook in the way Yahoo was sideswiped by Google. No one has the crystal ball. And its that kind of uncertainty surrounding Facebook; it won’t come from a nerd in his garage, but its easy to see the unforeseen pushing Zuckerberg off the parapet and into the moat. Post smartphone and post social-network in inevitable. Who in 2003 would have thought MySpace was going to die off?
Before Facebook hit the public market, it was already known to be fully valued, already drained vampire like. And anyone could sense it, the insiders would take the dough and run. But it is normal for prices to drop after an IPO, just look at everything from Yelp to ZipCar and approaching the $20 Facebook does not seem pricey. Its not going to disappear, it just depends on how they can evolve it.
Facebook Inc managed to record a $157 million dollar loss in their first ever earnings report, as a publicly traded company. Zuckerberg stated to investors “Hopefully you’ll come away with a clear perspective on our investments.”
“The reality is setting in that the negative effects of Zynga and credits business will lead to significantly reduced expectations on that side of the business over the course of the next couple years.
“On top of that, the fact that there’s no guidance in the press release likely has people concerned about the achievability of people’s full year expectations….
“Growth is clearly slowing on both the user and revenue basis, and without guidance to make people believe it’s growing, you have a large part of investor fear.”…
nt_65228" class="wp-caption aligncenter" style="width: 360px">