[benofsky]

RE: The stock being down ~10% in after-hours.

I think there's a real divide between the people who use Facebook, for whom it is (often) a serious part of their social life and, those who comment on FB in the media and invest in FB on the public market.

Being 19 Facebook is a critical part of finding out what's going on, organising events and, keeping in touch with everyone (whether I see them every day or once a year). I'm not unique in this, it's true for all my friends and pretty much anyone I meet, of my age, around the (western?) world.

Obviously, the market thinks FB is over-valued; I'm not commenting on whether it is or isn't. I'm just interested at what the market might value FB at if the people buying its stock used it as much and in the same way as younger generations. (As far as I see it, it's like a single private company owning the whole "phone system" for young people. What would that be valued at?)

[AlexMuir]

For me, the valuation of FB is closer to a TV channel with an audience of c. 500m people for 30mins every day of the week. And one which shows ads to people based on their own interests. What's that worth? I'm not sure.

The comparison with a phone network isn't quite right because I can't see FB ever being able to charge for service.

But I agree with your point. I think Linkedin is far more likely to be wiped out than Facebook, but the market thinks different.

[benofsky]

I like the TV analogy, it's perhaps more apt. Surely the point of any TV network is to show ads based on their viewers interests? Just FB is able to be much more targeted (at the same time they also have to compete with the huge over-supply of online display-ads, are my eyeballs worth more on facebook.com vs. joes-blog.com? I don't think so, which is the major issue with their current monetization strategy (EDIT: and they haven't shown that their targeting is significantly better than Google Adwords as of yet)).

I am confident though that they will find a way to make FB a seriously viable business. The list of things I use FB for is just so long, I don't see how they couldn't find at least one v. profitable workflow to tap into (organising a night out, checking-in on the night out, posting photos the next day, etc.).

[veyron]

There are things like adblock which allow you to fully experience facebook sans ads.

Yes, there is tivo etc, but you have to pay extra to get out of the ad experience (and it doesnt always work). TV ads are much more intrusive than FB ads, and I'd imagine TV-style facebook ads (like some websites that force you to sit through an ad) most likely will kill the platform.

[Gormo]

Are you sure about that re LinkedIn? Given its narrower customer base and usage model, LinkedIn is already employing a freemium model and charging for a higher service level. Their actual users do constitute a revenue stream in a way that Facebook's never could.

[vtry]

TV networks are not worth much.

[veyron]

"Facebook is a critical part of finding out what's going on"

" I'm just interested at what the market might value FB at if the people buying its stock used it as much and in the same way as younger generations"

A good company doesn't necessarily make a good stock. There's a real possibility that FB will become the next MySpace, especially if another firm figures out how to build a mobile social network and doesn't sell out to FB or Google.

[sbov]

Of course there's a divide.

Users are using a free service that they enjoy and want to continue to be free. Those who invest in Facebook want to make money because they're risking money. You have faith that they'll figure out their adwords, but are you putting your money where your mouth is - are you (or your friends) risking thousands or millions of dollars on your faith?

This really isn't anything new or unique to Facebook though. Customer satisfaction doesn't automatically make something a good investment.

[hexagonc]

The question isn't whether it's useful to a lot of people or not but rather how can FB make money from all these people? The infrastructure to support almost a billion users costs a lot of money. If FB was a subscription service with such a large user base, I think it would be valued quite a bit differently than it is as a free service.

[hyperbovine]

How much money would you say FB makes off of you? Serious question.

[benofsky]

I don't know. Obviously this matters in determining how much FB is worth. It probably isn't much right now but, I see the potential for huge future earnings, they haven't found their adwords yet, I'm confident they will.