[bonafidehan]

Growth is so important because that's the reason something is a good investment vehicle. You invest because you want to increase the amount of money you put in, not keep it the same.

Bottom line, the article is talking about growth in revenue and income. The article outlines that growth can come by two ways: growth in the number of users and the growth in $/user. It claims that the former has little upside because of how large Facebook already is. It raises questions about the latter.

[ArtB]

Growth could be flat and if they paid dividends and stock price stayed flat as well I'd be perfectly happy to buy that stock.

[damoncali]

You would. But at a much lower price. Do the math on the profit per share of facebook - assuming they pay it all out in dividends. It's tiny.

[awakeasleep]

From what I've read, Facebook isn't really interested in cultivating investment. Look at the small float, and Mark Z's firm control of the company with over 50% ownership.

In many ways, for the man on the street Facebook isn't a good investment. At the same time, it doesn't seem to be a goal of management to create a company that entices investors. See the line "we make money to create a better product, not create products to make money."

Doesn't that say it all?

[bonafidehan]

The value of equity for a public company isn't a metric that only investors care about. It is the most comprehensive measure of a public company's well-being. It describes how much money the company is making and it predicts how much money the company is expected to make in the future.

E.g., suppose Facebook's equity takes a significant decline in value on the public market: employees become unhappy as the equity component of their compensation declines; Facebook's ability to make large acquisitions becomes more expenseive when its stock is worth less; and its ability to raise capital diminshes because it's more expensive to borrow exactly because their financials aren't as good, according to their stock price.

I personally believe that the long-term goals of investors and founders are very well-aligned. I believe that the common statment by founders nowadays, that they are building a company not for their investors but for their users, will produce the long-term financial results that investors want. It's the short-term goals of investors that conflict with that.

In short, equity isn't this isolated thing that can be happily ignored. It's tied to everything.

[Gormo]

Then why the IPO, except as an exit strategy for the founders?

So Zuckerberg cashes out at Facebook's peak, leaving the subsequent 'investors' with nowhere to go but down. I wouldn't necessarily put that intention past Zuckerberg, and perhaps a Facebook collapse would be a good thing for openness and interoperability on the web, but isn't it a bit of a self-defeating strategy? Can the hype machine generate enough naive investors to generate a substantial cash-out?