Why I’m not going to buy “shares” in Facebook

Why I’m not going to buy “shares” in Facebook

It’s nearly two weeks since Facebook was floated on Nasdaq. Things started so bright for Mark Zuckerberg and his “beloved” Facebook, with share prices starting off at $38 a pop catapulting Zuckerberg into the world’s rich list, valuing Facebook at $104bn. Since May 18th (the date Facebook was floated) there have been numerous events that don’t bode well for the future of Facebook. It started with GM (General Motors) dropping their Facebook advertising campaign, followed by Facebook share prices dropping on a daily basis to an all-time low of $29 yesterday (May 29th). Is Facebook Really worth $104bn? Personally, all the hype surrounding the Facebook flotation never got me excited. The obvious question is: How can Facebook be valued at $104bn? Despite the company’s attempts to generate profit from “Facebook ads”, it can’t be enough to justify the $104bn price tag placed on the company. I mean, do people actually click on Facebook ads? Developing countries don’t even use Facebook! Well not quite, but developing countries don’t seem to favour Facebook. Instead, they opt for what, to us, seem like obscure social networks. For example, in India we see that Orkut is the market leader in social networks; in China a little-known (to us in the West) social network called Qzone has over 388 million users; and again, in Brazil, we see Orkut dominating. These are three of the world’s fastest developing countries and judging from this evidence, Facebook has failed to capitalise on this. There are now serious competitors to Facebook out there Only a couple of years ago Facebook was a operating in a monopolistic market.  MySpace was... Read more...