This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

If Only Everybody Understood Facebook Like Apple Does

NEW YORK ( TheStreet) -- CNBC's Julia Boorstin hit a home run with her interview of Facebook (FB - Get Report) COO Sheryl Sandberg.

I have an enigmatic relationship with Facebook.

Based on the pending mobile revenue explosion, I'm confident in my position in FB. At the same time, I leave room for uncertainty vis-a-vis the company's long-term future.

There's something about Facebook that doesn't spell sustainability over the long term. I just don't see it becoming an institution like Twitter. At least not as things stand today.

As much as I think they should ignore the media and, to an extent, shareholders -- sort of like Apple (AAPL - Get Report) does -- part of me feels like Facebook wins when Mark Zuckerberg and Sheryl Sandberg speak in public and high-profile settings. They both do a nice job instilling confidence.

So, near term, I'm not all that concerned.

Thinking farther out, Facebook faces two fundamental challenges.

Part of the CNBC coverage nailed point one: Investor pressure forces Facebook to do things differently.

In the perfect world of the perpetual startup, focus never veers from the user experience. Once public, however, shareholders exert pressure. You're compelled to change. Some folks argue that you "have" to change.

Facebook feels this stress.

In just the last few weeks the company appears to have accelerated monetization efforts. While Facebook Gifts and "social search" will likely ring the register -- thus my long position -- I dislike a too-fast, too-soon approach to revenue and profitability.

I know that sounds foreign to many investors. But "many investors" just don't get it. They'll never understand the notion of the perpetual startup. They simply refuse to take that perspective.

That segues to Facebook's second fundamental challenge.

As Sandberg told Boorstin, social ads are a new platform, thus, it "takes a while to understand." In other words, Facebook has to train certain advertisers. It has to arm wrestle them out of their outdated ways.

Consider the difference between Ford (F) and General Motors (GM).

Of course, GM made headlines when it canceled Facebook advertising (and bailed from the Super Bowl). Despite the reality that Facebook actually dissed GM, the news initiated the meme that Facebook ads are not effective. There's no ROI.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $129.09 0.49%
FB $79.75 0.99%
GOOG $571.34 2.32%
TSLA $197.32 -2.96%
YHOO $44.11 -0.38%

Markets

DOW 18,288.63 +155.93 0.86%
S&P 500 2,117.39 +12.89 0.61%
NASDAQ 5,008.0960 +44.5690 0.90%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs