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Re: <nettime> The $100bn Facebook question: Will capitalism survive 'val
Florian Cramer on Thu, 8 Mar 2012 23:44:57 +0100 (CET)


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Re: <nettime> The $100bn Facebook question: Will capitalism survive 'value abundance'?


On Thu, Mar 8, 2012 at 2:21 PM, Mark Andrejevic <m.andrejevic {AT} uq.edu.au> wrote:

> So, according to Michael's numbers, to live up to its valuation, Facebook will need to quintuple its profits fast -- without alienating users. That will likely be challenging, especially at a time when its aggressive tactics have drawn a lot more attention to its legally suspect strategies (at least according to some recent court decisions).  His estimate tracks with others I've seen claiming that Facebook will need to double its profits each year for the next couple of years. A lot of people (or a few people with a lot of money) are going to have to believe targeted advertising is worth the price for that to happen.

These are very interesting calculations. But their bottom-line could
be that seeking to increase its profits is actually not Facebook's
priority. The real concern for the management and current investors of
Facebook could be how much it will raise with the IPO, and how much
time will be left for divesting into other assets. Facebook is in a
comfortable situation because of its market share and the lack of
alternatives for investments on the American stock market after
classic manufacturing industries, real estate and the financial
industry have all become non-options, with the tech industry remaining
the strongest part of the economy, and Facebook being the only major
tech company to go public and offer investment opportunity.

Facebook's IPO is a programmed success regardless the burden of profit
that it has to make in the future. The only question concerns the
relation of 'smart' and 'stupid' money buying the stocks. But it
smells a lot like a Ponzi scheme - the 'new economy' all over again -
where those owning the company now can't lose, regardless actual
business numbers.

Florian




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