[HWR_14]

Facebook lost half it's value (maybe literally by now) because they stopped growing on just their flagship product (the MAU went down by a rounding error).

So why not provide a sustainable service? Because it's not valued in the market.

[dgb23]

Facebook degraded in quality and tried to squeeze everything out of their users instead of improving quality and innovation. It's short term tactics.

[lotsofpulp]

Sustainable service is valued, at the rate of inflation. If you want 20% annual returns over inflation, then you need to provide commensurate growth.

[HWR_14]

That doesn't seem to align with any economic theory or evidence I'm aware of. Care to explain your reasoning?

[WJW]

Not GP, but doesn't this just kinda follow from the definition of inflation? If you keep offering the same value but the currency it is priced in inflates by N%, you "should" be able to raise your prices by N% and not gain/lose any customers since the inflation adjusted price remains the same. This will obviously result in revenue growth of N%.

If you want revenue growth above inflation, you will need to either acquire more users, charge them more for the same product, or both. Building up the value of the product you're offering can help with both. Of course in the case of facebook these points get a bit muddled, since the users get the product for free anyway and they have such a giant customer base that finding new users is becoming an issue.

[lotsofpulp]

Why would anyone pay a premium for equity in Netflix if it is not going to provide premium returns? If I wanted average return on investment, then I would just buy a low cost index fund like VOO.

[HWR_14]

You seem to be answering a different question. I asked about you saying:

> Sustainable service is valued, at the rate of inflation.

[lotsofpulp]

Your original comment presumably talks about Facebook’s market capitalization (Facebook’s value going down), and that being a sign that the market does not “value” a sustainable service. I interpreted a sustainable service as one that does to grow by leaps and bounds and every year, and instead just chugs along offering a steady product at a steady price.

Hence my comment being that the market “values” businesses with sustainable services by offering to pay a premium for a piece of the business commensurate with the rate of inflation. Which is why Facebook’s stock price stalled, since their market cap had priced in much higher growth, and prospective buyers now do not expect that growth, and are willing to pay much less for a piece of Facebook.

[panick21_]

What are you talking about? Of course its valued, that literally why those companies have value.

But of course its valued far less then a growing company.

This seems to be fairly basic and totally logical. Stock market is forward looking. If your future it the same as present that fine but it means over time you shrink relatively and you are likely not robust against paradigm changes.