FaceBook IPO Its all downhill from here
Posted on Jan 22, 2011 by
Paul WhiteFacebook is going public. Even though there are many
websites who's parent companies have gone public. Facebook is the first which is based around a single website. Not just that but unlike other companies that are diversified across many different fronts. Facebook for the most part is just a social networking website. I predict that everything will be downhill from here. Don't buy this stock!
What is wrong with facebook's IPO
The biggest problem is the lack of growth they will be able to achieve. When you are as big as facebook its not like you are going to grow your traffic by 20% per year. But their growth is not the problem. Their problem is users don't need facebook any more than they needed myspace. If the facebook website were go go down for a period of days, very few companys would be hurt by this. On the other hand if Google was to go down, this could potentially bankrupt many companies which are dependent on google referring traffic to them. The world needs google, but the world does not need facebook. Its a place where people share family photos, and communicate. But its not a place where people do
business.
Facebook is less likely to make the same mistakes as MySpace
MySpace's success was largely due to the wild west nature of its platform. What started as a few members injecting
CSS into their form fields to give the page a different style, expanded into being what everyone did. This of course had huge
security holes. Even though MySpace needed to patch these holes, they couldn't go to a strict fixed layout like facebook. Its users liked the freedom to change up all the elements of their pages by
hacking the
CSS. Its one thing to give people the freedom to customize the pages, but MySpace users have no concept for the affect of inserting a dozen animated Gifs, Videos, and photos on a single page. A user had to download sometimes 10 Megs of graphics to view the page. This brought for a poor user experience. Plus MySpace quickly became overwhelmed with predators, and spam. MySpace was not quick enough to shut these down, as blocking IPs would lead to decreased traffic numbers, and this would have a negative impact on image. Facebook on the other hand runs a strict site, with no possibly way to hack your pages. They are very strict on use too. They have many IPs and countries blocked from the site, and they sue those who abuse the platform. Just like a good NightClub, Facebook has
security and bouncers that work round the clock to make sure the site stays safe.
My Prediction on facebook's future
After they launch their IPO, and when I saw launch I mean its available via your discount broker ( not just to foreign investors ). They will now have to deal with meeting their quarterly expectations. If they so much as loose even the smallest bit of traffic this will be destroy the stock. Facebook already is getting press about privacy issues. I predict this will eventually be their undoing. People will become scared about facebook knowing too much about them and third party developers will cater to this fear with adblockers that will block facebook's ads from being delivered to your browser. This over time will hurt facebook's bottom line as companies that advertise on facebook will start to see no return on investment. Keep in mind facebook is not like google who is diversified in many aspects of the web. Facebook's only revenue generator is its ads.
Once again stay away from this stock!
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