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More Doubts About "Liking" Facebook

Reggie Middleton's picture




 

Nearly one year ago, I warned yet again of the trend starting to turn against Facebook. For those who don't follow me, I was most bearish on Facebook - even before its IPO. This was not because I doubted the company, but because I doubted the Goldmans Sachs/Morgan Stanley snakeoil salesman valuation. To wit:

pre-IPO - Facebook Registers The WHOLE WORLD! Or At Least They Would Have To In Order To Justify Goldman’s Pricing: Here’s What $2 Billion Or So Worth Of Goldman HNW Clients Probably Wish They Read This Time Last Week!

at the IPO - The World's First Phenomenally Forensic Facebook Analysis - This Is What You Need Before You Invest, Pt 1 as well as The Final Facebook Forensic IPO Analysis: the Good, the Bad & the Ugly

and post-IPO - On Top Of The 2x-10x Return Had Off Of BoomBustBlog Facebook Research, Our Models Show How Much More Is Available... as well as...

These reports and articles saved my subscribers a ton of money and making those few braver souls another ton in shorts and puts. I cautioned about Facebook again, not so much on valuation but on future growth prospects as FB actually encountered negative subscriber growth likely caused by competitors stealing potential market share during a period where it was supposed to be experiencing rapid growth (see I Don't Think Facebook Investors Will "Like" This ...). Of course, nearly all sell side analysts and financial pundits in the media somehow overlooked this. 

Well, while on the topic, let's peruse this infographic by Finance Degree Center. Please note this is a very large graphic, so click it to enlarge and see the whole thing (it is big!).

thumb finance center on facebookthumb finance center on facebook 

How the Facebook story got started...

Facebook started its institutional investment life as a very popular, very well known company. Goldman took this story (private) stock and went bananas with it, as meticulously illustrated in the following blog posts:

  1. Facebook Registers The WHOLE WORLD! Or At Least They Would Have To In Order To Justify Goldman’s Pricing: Here’s What $2 Billion Or So Worth Of Goldman HNW Clients Probably Wish They Read This Time Last Week!
  2. Facebook Becomes One Of The Most Highly Valued Media Companies In The World Thanks To Goldman, & Its Still Private!
  3. Here’s A Look At What The Goldman FaceBook Fund Will Look Like As It Ignores The SEC & Peddles Private Shares To The Public Without Full Disclosure
  4. The Anatomy Of The Record Bonus Pool As The Foregone Conclusion: We Plug The Numbers From Goldman’s Facebook Fund Marketing Brochure Into Our Models
  5. Did Goldman Just Rip Its HNW and Institutional Clients Once Again? Facebook Growth Slows Pre-IPO, Just As We Warned!

I issued private research to my subscribers while publicly warning that Facebook at, or anywhere near, its IPO price was a blatant bald faced SCAM & RIPOFF!!!

  1. The World's First Phenomenally Forensic Facebook Analysis - This Is What You Need Before You Invest, Pt 1
  2. The Final Facebook Forensic IPO Analysis: the Good, the Bad & the Ugly

As the actual IPO arrived, JP Morgan, Morgan Stanley, Goldman Sachs, etc. piled on the Bullshit, basically espousing how great an investment this was at $38, screaming that this was a once in a lifetime opportunity. Basically, they took the opposite stance of yours truly. And how did that worked out??? BoomBustBlog Challenges Face Ripping Facebook Share Peddlers That Left Muppets Faceless And Nearly 50% Poorer After IPO.

Here is a full year of free blog posts and paid research material warning that ANYBODY following the lead of Goldman, Morgan Stanley and JP Morgan on the Facebook offering would get their Face(book)s RIPPED!!! Could you imagine me on a reality TV show based on this stuff??? Well, it's coming...

  1. Facebook Registers The WHOLE WORLD! Or At Least They Would Have To In Order To Justify Goldman’s Pricing: Here’s What $2 Billion Or So Worth Of Goldman HNW Clients Probably Wish They Read This Time Last Week!
  2. Facebook Becomes One Of The Most Highly Valued Media Companies In The World Thanks To Goldman, & Its Still Private!
  3. Here’s A Look At What The Goldman FaceBook Fund Will Look Like As It Ignores The SEC & Peddles Private Shares To The Public Without Full Disclosure
  4. The Anatomy Of The Record Bonus Pool As The Foregone Conclusion: We Plug The Numbers From Goldman’s Facebook Fund Marketing Brochure Into Our Models
  5. Did Goldman Just Rip Its HNW and Institutional Clients Once Again? Facebook Growth Slows Pre-IPO, Just As We Warned!
  6. The World's First Phenomenally Forensic Facebook Analysis - This Is What You Need Before You Invest, Pt 1
  7. The Final Facebook Forensic IPO Analysis: the Good, the Bad & the Ugly
  8. On Top Of The 2x-10x Return Had Off Of BoomBustBlog Facebook Research, Our Models Show How Much More Is Available...
  9. Is Time For Facebook Investors To Literally Face the Book (Value)?
  10. Facebook Bubble Blowing Justification Exercises Commence Today
  11. Facebook Options Are Now Trading, Or At Least The PUTS Are!
  12. Reggie Middleton breaks down "Muppetology," Face Ripping IPO's, and the Chinese Wall!
  13. Facebooking The Chinese Wall: How A Blog Has Outperformed Wall Street For 5 Yrs
  14. Why Shouldn't Practitioners Of Muppetology Get Swallowed In A Facebook IPO Class Action Suit?
  15. Shorting Federal Facebook Notes Are Not Allowed Today ?
  16. As I Promised Last Year, Facebook Is Being Proven To Be Overhyped and Overpriced!

It would seem that Facebook Finally Faces The Fact Of BoomBustBlog AnalysisProfessional and institutional BoomBustBlog subscribers have access to a simplified unlocked version of the valuation model used for this report, available for immediate download - Facebook Valuation Model 08Feb2012. I just nominally input some very generous numbers and the best case scenario chart (see the chart tab after your own individual inputs) is quite revealing, indeed! The full forensic opinion is available to all subscribers here FaceBook IPO & Valuation Note Update, and the latest iteration can be found here FB IPO Analysis & Valuation Note - update with per share valuation 05/21/2012. It is recommended that subscribers (click here to subscribe) also review the original analyses (file iconFB note final 01/11/2011).

 

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Sat, 02/01/2014 - 17:50 | 4391878 ReactionToClose...
ReactionToClosedMinds's picture

not to per se slander FB but have insights that just begs questions about valuation ...but so what .....almost every company has stuff going on . being done, been done ....that is not all that impressive ....or value-creating.

Exxon ....well-run, time-tested above-average capital allocators ..... made hefty bet on natural gas reserves ...... maybe good long term idea ... but short term shale gas flood just started .......

who is to say? the market is the answer ..... and time

Fri, 01/10/2014 - 22:35 | 4321694 butchtrucks
butchtrucks's picture

My 16 and 14 year old kids stopped using Facebook two years ago.  They spend their whole time on Snapchat and Instagram.  Facebook is considered seriously uncool by anyone under 20.  Who wants to be on something your parents are using?   The thing is in now in the same death-spiral as MySpace went though last decade.

Fri, 01/10/2014 - 22:17 | 4321652 Hellomoto
Hellomoto's picture

I HATE FACEBOOK>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

Fri, 01/10/2014 - 18:45 | 4321109 q99x2
q99x2's picture

What's not to "Like"?

Wouldn't know. Never been there.

Fri, 01/10/2014 - 19:41 | 4321249 wintermute
wintermute's picture

Exactly. Me too. Though I have heard about this "like" crap and it sounds so infantile. No one can have shades of opinion. Something can't be "interesting", "brilliant", "boring", "off-topic", "biased", "poorly explained". Everything has to be binary: like / dislike. The whole complex social discourse of humanity reduced to an unconscious reflex response.

FB, go away, stay away.

 

Fri, 01/10/2014 - 18:06 | 4321044 Darkside
Darkside's picture

All young people 13-19 that i know say fade book is for old people and DONT use it. 

Fri, 01/10/2014 - 15:48 | 4320644 ebworthen
ebworthen's picture

Agree with Reggie.

Reminders for Facebook buyers:

  1. MySpace
  2. Yahoo! IM
  3. Motorola
  4. Nokia
  5. Pets.com
Fri, 01/10/2014 - 15:01 | 4320462 Dr. Bonzo
Dr. Bonzo's picture

Facebook is one of the most effing useless websites I've ever been forced to use. Yeah, forced to use, because lots of acquaintances and the 20/30-something crowd compel you to contact them or stay updated with whatever information you need from them through their FB page. It's annoying to use, the searches aren't worth a shit, and FB's interest in your own activities is not only annoying but frightening.

Can't die soon enough.

 

Fri, 01/10/2014 - 15:02 | 4320411 Rusty Shorts
Rusty Shorts's picture

Snowden is Mark Zuckerberg 

https://www.youtube.com/watch?v=ZFmfe0uFyyA

Fri, 01/10/2014 - 13:54 | 4320132 tedstr
tedstr's picture

Excellent Reg.  Dead on.  Ill go you one better.............huge chuncks of thir revenue are from kids games which is veryu fad based and it masks the underlying weakness of theeir core ad business....a business that has ZERO pricing power and relies on a greater fool volume of users and PVs.....once these go into decline it will be a holy mess.

Fri, 01/10/2014 - 14:34 | 4319983 Common_Cents22
Common_Cents22's picture

Facebook will be replaced with an open source social media platform.   Watch for it in the near future.   now that FB is public, it can't help but infringe on users with immense pressure to monetize.  By the time they realize they have a user leaving problem, it'll be too late.   Get the herd going in a direction and there is nothing you can do to stop it.

FB script itself is easy to replicate, its just waiting for a little mass psychology to kick in and the herd mentality.   What's funny is the new open source platform will be spread like wildfire on...you guessed it.....FB.

Fri, 01/10/2014 - 18:50 | 4321123 q99x2
q99x2's picture

The Federal Reserve and Washington D.C. will be replaced with an open source societal system that is founded in the morality of the individuals that make it up.

Fri, 01/10/2014 - 12:05 | 4319568 Sofa King Confused
Sofa King Confused's picture

Facebook does not need to make any money.  They have unlimited money from the NSA.

Fri, 01/10/2014 - 16:06 | 4320707 Yenbot
Yenbot's picture

C'mon. Say it. Face Book Inc.

F...B...I...

Fri, 01/10/2014 - 12:49 | 4319778 Fíréan
Fíréan's picture

Are they not tax exempt too, in all the countries where the service is available ?

Fri, 01/10/2014 - 11:35 | 4319443 Temporalist
Temporalist's picture

Reggie the link to the infographic only goes to your website and the enlarged thumbnail not the full infographic which is here:

http://www.financedegreecenter.com/facebook/

Fri, 01/10/2014 - 10:40 | 4319247 rubiconsolutions
rubiconsolutions's picture

MOAR links!

Fri, 01/10/2014 - 11:55 | 4319517 Zero Hung
Zero Hung's picture

I don't know what shit Reggie is on, but his output is prodigious. Maybe Reggie should open alt social media e.g. 'Snuffbook', 'Crackchat', 'OffMyFace' etc. The guy is a fucking oracle too. Reminds me of that scene out of Lord of the Rings, when the hot Galadriel (Elf Queen) has all the answers in her silver mirror. A bit like Reggie's cornhole has all the answers:

Reggadriel: Will you look into my puckered anus?

Muppet: What will I see?

Reggadriel: Even the wisest cannot tell. For the coal-black crack shows many things... when you look into the abyss it also looks into you. Things that were, things that are, and some things... that have not yet come to pass.

[Looking deep into Reggie's chocky starfish, the muppet sees the Facefucks enslaving the sheep and reducing the internet to a militiarized wasteland; finally, the Eye of NSAuron causes him to stumble backwards]

Reggadriel: I know what it is you saw; for it is also in my mind. It is what will come to pass if you should fail. Fuckfacebook is breaking. It is already begun. They are the fucking PR division of the spook squad. They will try to give you all the privacy fingering. You know of whom I speak. One by one, it will destroy them all.

Muppet: If you ask it of me, I will give you a fingering.

Reggadriel: You offer to give me the fingering freely? I do not deny that my heart has greatly desired this...

[Suddenly fierce like Priscalla Queen of the Desert].

In place of a black steed, you would have an ebony queen! Not dark, but beautiful and terrible as the dawn! Treacherous as the squid! All shall love me and despair!

[Stops, shaken, and becomes calm again].

I passed the test. I will diminish, go into the West, post another 250 links per article, and keep claiming a 100% economic hit rate.... and remain Reggadriel.

Fri, 01/10/2014 - 21:43 | 4321571 jomama
jomama's picture

icwutudidthar

Fri, 01/10/2014 - 12:43 | 4319744 donsluck
donsluck's picture

Nice post, oh puckered one!

Fri, 01/10/2014 - 10:16 | 4319162 Rising Sun
Rising Sun's picture

if FB gets into search with ads, they will have something - for now, they are a fad for the old people - the kids have passed through already

 

 

Fri, 01/10/2014 - 20:51 | 4321455 Race Car Driver
Race Car Driver's picture

> they are a fad for the old people

I think that was the intent. Everyone knows that teens are finicky and will discard a fad in an instant and move on to something else. Hard to be an edgy company for the long run, especially with teenware.

Anyhow, that's all moot. FB is part of Web 2.0, or, Web For Dummies.

It's where they put the multitudes who don't know squat about technology and aren't going to learn because of laziness, stupidity or for whatever reason. Nice shiney buttons to display things to 'do'. It's the internet with a remote ... clickety-click. Children who don't even know how to read can use Web 2.0. It's by design. One big digital feed lot where TPTB can keep an eye on things and the users don't even know they're in a corral. Web 2.0 is what nearly half of Americans tune into while they're watching television. Oh, the irony.

 

FB has a future for the very reason that all these idiot users now have all their pictures and personal thoughts and feelings graffittied all over FB and are too lazy and stupid to move it somewhere else. The cows have been trained to use FB - that's where they'll stay. Besides, all thier friends are there.

 

 

Fri, 01/10/2014 - 10:40 | 4319249 czardas
czardas's picture

FB is rapidly entering the business world.  Many small businesses have replaced expensive web sites with easy to use FB pages where news, pictures and information can be posted instantly.  (I have a FB account not visitied in months by the way.)  Reggie can be right and still be wrong.   Companies do not need massive profits to attain enormous value - Amazon is a case in point....still waiting for a profit as the stock price tops $400.   On the surface it's perception but the smart players go with profits.

The market may be "high" but companies are still earning profits and that is the driver.  Of course they are doing this through even more efficiency, automation and verticalization.  Those that survive are the ones that best respond to rapidly changing technology. 

Fri, 01/10/2014 - 12:59 | 4319830 marriedgeordie
marriedgeordie's picture

not junking you, but would you create a website on a platform not visited by your potential clients? why the fuck do i need to set up an account somewhere to go to a business web-site? also, whenever i see "like us on facebook" on a shop door, this makes me less likely to patronise that particular establishment.

Fri, 01/10/2014 - 12:45 | 4319763 maskone909
maskone909's picture

i didnt junk you but, value?  strike that from your vocab.  think QE. 

Fri, 01/10/2014 - 10:00 | 4319099 Max Hunter
Max Hunter's picture

FB is a fad, just like everything else. People will get tired of it and something new will come along. Only a Moron would this is a long term investement for their portfolio.

Fri, 01/10/2014 - 18:12 | 4321059 ebear
ebear's picture

"Only a Moron would this is a long term investement for their portfolio."

Not an investment, just another wealth transfer scheme - like mining stocks - original investors (management and underwiters) cash out as the rubes roll in.  Rinse and repeat.

Fri, 01/10/2014 - 11:44 | 4319481 the tower
the tower's picture

100% agree, remember MySpace?

Fri, 01/10/2014 - 12:43 | 4319747 disabledvet
disabledvet's picture

spared no expense to build that thing out....the number of users on that thing is simply staggering...and able to cover perhaps every human on earth. "dossiers on entire generations" past, present and future...all turned over as part of the "human network." hard to put a value on it after what was easily the worst IPO in history...still, it didn't go bankrupt so that was a plus. I have to laugh at Twitter moonshoting as well. the very anti-thesis of Facebook..."commercial grade" as they say and how the media business is actually "done" now (they all have their twitter feeds before going on the air...while on the air actually. at least the good ones do.) complete Aposite of Facebooger which is the "dull, drab, mindless collection of the everyday." good call on google RM, still think that thing is way overpriced as they go all in on a price war with Uncle Sam(sung) with the global telecom industry thrown in "just for fun."

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