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Ross Douhat on the Facebook Illusion!

Dear Commons Community,

There has been so much commentary on the Facebook I.P.O.  during the last two weeks that it was difficult to follow all of the comings and goings.  What started as the Wall Street deal of the century ended in a fiasco and many people losing a good deal of money.  Ross Douhat provides a sober view of all of this in his New York Times column this morning.  Here is a sample:

“I will confess to taking a certain amount of dyspeptic pleasure from Facebook’s hard landing, which had Bloomberg Businessweek declaring the I.P.O. “the biggest flop of the decade” after five days of trading. Of all the major hubs of Internet-era excitement, Mark Zuckerberg’s social networking site has always struck me as one of the most noxious, dependent for its success on the darker aspects of online life: the zeal for constant self-fashioning and self-promotion, the pursuit of virtual forms of “community” and “friendship” that bear only a passing resemblance to the genuine article, and the relentless diminution of the private sphere in the quest for advertising dollars.

But even readers who love Facebook, or at least cannot imagine life without it, should see its stock market failure as a sign of the commercial limits of the Internet. As The New Yorker’s John Cassidy pointed out in one of the more perceptive prelaunch pieces, the problem is not that Facebook doesn’t make money. It’s that it doesn’t make that much money, and doesn’t have an obvious way to make that much more of it, because (like so many online concerns) it hasn’t figured out how to effectively monetize its million upon millions of users. The result is a company that’s successful, certainly, but whose balance sheet is much less impressive than its ubiquitous online presence would suggest.”

Tough commentary for a lot of Facebook investors!

Tony

 

5 comments

  1. Tony,

    The only mania I see is from mainstream media and uneducated investors. I tried investing my own money a few years ago and lost a serious sum of cash.

    Today, I have a highly qualified investment advisor and my returns are always in the double digits.

    People should not be investing their own money…. because when they do, they go off and buy things like Facebook.

    If people want to invest in something with their own money… I have some photographs to sell.

  2. Hey, Adam,

    Thanks for your comment. I agree with you and your financial adviser but many people were looking to buy. Below are three examples of the Facebook “mania” or may be just hype.

    Tony

    http://www.mediabistro.com/tvnewser/facebook-mania-sweeps-cable-news_b128709

    http://www.minyanville.com/business-news/markets/articles/fb-amzn-ebay-renn-aapl-bidu/5/18/2012/id/41108

    http://www.benzinga.com/trading-ideas/previews/12/05/2599169/the-facebook-ipo-whats-not-to-like

  3. Tony,

    I am not sure where you get “Wall Street Deal of the Century from.” I admit there was a lot of talk about it… but when I asked my financial advisor about it several days before the IPO he actually laughed. According to him, there was very little chance, if any, the Facebook IPO was a good investment.

    Now, I will admit that my financial advisor is “well above average” but how did he have such affirmative knowledge, when others did not.

    To me, this is just another good example of why people should not be investing their own money.