On the downside, the social media giant is finally sobering up to reality after its pre-IPO crack high. Investors are figuring out that a business with Harvard, Goldman Sachs (GS) and a major motion picture behind it actually might not be much of a business at all. Instead of headlines and widely quoted figures about Facebook being magically worth $50 billion, as was the case when Goldman placed its Facebook bet in January 2011, now the headlines say that this book has lost $50 billion in value since it went public.
And the howling chorus of questions about the firm is on the rise.
Rob Cox, who reliably writes about digital investments over at Reuters' Breakingviews, noticed that while sales and subscribers sound cool, costs matter too. Revenue may be up $2.4 billion in the first six months of 2012, as he wrote last week, but costs rose even higher -- to $2.6 billion in the same period.Even the gritty issues of social media click fraud and ad effectiveness are finally dinner table conversation for investors. Manorville, N.Y.-based Limited Run, which offers a Web retail sales service for bands and artists, was widely reported to have deleted its Facebook page due to nonhuman bots that sapped value. To be fair -- which is most definitely getting overlooked in this ugly din -- Facebook is taking these issues seriously. Limited Run said in a follow-up post that the company is investigating its problems. And the social media giant is conducting industry outreach. It worked with a metrics shop, Reston, Va.-based comScore, on a white paper called The Power of Like 2 to spell out the argument for social media as an ad medium. And -- even more startling for Facebook -- real company executives are answering real journalist's questions. Mark Rabkin, a director of engineering, submitted to a Q&A with Forbes, and in it he did a reasonable job of explaining the company's security concerns and revealing that the operation has a legit staff of 300 people who manage spam.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
24/7 market commentary from Jim Cramer and 20+ veteran Wall Street gurus. Get access to the latest trading ideas on stocks, options, and ETFs as well as a real-time forum to see the pros exchanging their investment ideas.
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV