[xpose2000]

I'm certainly no expert when it comes to evaluation of a company. These are merely my thoughts as a tech geek and developer. When Google IPO'd some experts made claims that ( I am paraphrasing here), Google is entering a crowded Search market and the real money was in portals.

As a geek , I fully grasp Facebook's 12.24 pages/visit stat. Even Reddit is just a hair below, at 10.6. (source: Alexa). That type of engagement is insanely hard to get for a site as big as Facebook. Investors do not look at these things because they do not understand what they mean. They look at traditional investor metrics.

If Facebook included ONE banner ad across the top of their pages, their revenue would soar. They are choosing their own path and are paying the price for it right now. Time will tell if their method will work out.

What I do know is that investors are a finicky bunch. When Zuck spoke at Disrupt 2 weeks ago investors decided to buy Facebook and it rose 4 dollars since then. The reality is nothing had changed, but in their eyes it just looked better. Fair enough, that is how the game is played.

If an investment firms evaluates traditional companies like Borders, Best Buy, or Radioshack then I would not even question their expertise. They are a very knowledgeable bunch when it comes to traditional companies.

However I do not believe their analysis of the tech companies that exist on the internet is as accurate, simply because they do not fully understand the industry and web.

[SoftwareMaven]

The 1990s tech bubble was all about those "non-traditional" metrics like page views and "eyeballs". Turns out they are a horrible predictor of the intrinsic value of a company. So investors went back to the boring, old metrics that, regardless of industry, seem to be able to provide some true indication of the health and value of a company.

I will agree that Google and Apple aren't the right companies to compare FB with. But FB is having mobile problems, and Apple and Google do seem to have reasonable mobile strategies, so I can understand why analysts do that.

[spinchange]

So you admit that you're not an expert in evaluating companies and think that analysts are only qualified to evaluate brick and mortar retail companies, and on that basis $15 per share sounds too low?

Let me give you a tip: Professional investors absolutely understand the value of pageveiws and engagement and all that fun stuff. It's why facebook was able to basically name their multiple with the IPO underwriters and it was the biggest offering in history.

However, when the rubber meets the road, it is simply not the most important metric nor is it any guarantee of long-term future profits (forget about current profitability for the sake of argument.)

Is a TV channel with the highest ratings automatically the best investment? What if their costs are insane? What if they're about to lose some great shows or the popularity of them is waning. Hey, it's the most popular station, so it has to be worth the most, right?? To say otherwise isn't an issue of not "getting it," it's a matter of understanding that business is business whether we're talking websites, widgets, or retail.

[wdr1]

> As a geek , I fully grasp Facebook's 12.24 pages/visit stat. Even Reddit is just a hair below, at 10.6. (source: Alexa). That type of engagement is insanely hard to get for a site as big as Facebook. Investors do not look at these things because they do not understand what they mean. They look at traditional investor metrics.

I think they grasp it. The reality is when it comes to financial matters, engagement isn't the only (or even most important) metric. In fact, it doesn't matter squat if you can't monetize it. And that's exactly the stumbling block FB has run into.

You can retort engagement is important because it's a sign of a happy user & monetization shouldn't matter. Which is fine, but then the stock price shouldn't matter either.

[htmltablesrules]

The biggest red flag that I see when it comes to fb stock is that it has single digit institutional ownership. Even yahoo has 75% institutional ownership. Fb has like 7% IO. Big money is staying away from fb and that is a huuuuge red flag.

Institutional ownership is a vote of confidence for the long haul. Mutual funds and pension funds buy long and cannot participate in short selling.

Big money knows something about fb long term prospects that all of us don't. I don't know what that is but their actions speak louder than anybody's opinions can.

[SoftwareMaven]

Has FB sold enough stock for IOs to get a double-digit percentage? Zuck alone is controlling over 50%, thanks to Andreeson. A more interesting question is, of the stock that's been made publicly available, what percentage was purchased by IOs?

(FWIW, I wouldn't touch FB right now, either. There are a couple of high risk issues I think they have to deal with, and I'm not sure they will come through unscathed.)