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) 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 It has to arm wrestle them out of their outdated ways.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.
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