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15-01-2018, 08:42 AM
(This post was last modified: 15-01-2018, 08:42 AM by weijian.)
Mark doesn't really have "skin in the game" since he has pledged at least half his shares in the giving pledge. Not a bad move in my opinion for the "long term social health" of users in general.
Mark Zuckerberg loses US$2.9 billion after announcing Facebook will prioritise friends over businesses
Facebook will now prioritise users’ friends and family, rather than news and businesses, to encourage conversation – and that has sent shares tumbling
http://www.scmp.com/tech/leaders-founder...te-changes
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(15-01-2018, 08:42 AM)weijian Wrote: Mark doesn't really have "skin in the game" since he has pledged at least half his shares in the giving pledge. Not a bad move in my opinion for the "long term social health" of users in general.
Mark Zuckerberg loses US$2.9 billion after announcing Facebook will prioritise friends over businesses
Facebook will now prioritise users’ friends and family, rather than news and businesses, to encourage conversation – and that has sent shares tumbling
http://www.scmp.com/tech/leaders-founder...te-changes
what about the other half?
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15-01-2018, 12:50 PM
(This post was last modified: 16-01-2018, 05:24 PM by Wildreamz.)
As long as people need social media, and social media remains the best way to quickly reach a wide audience, Facebook (the only social media company that matters) will remain relevant.
I'm glad that Mark Zuckerberg acknowledged that change is needed, and course-correct for a more sustainable future.
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15-01-2018, 08:02 PM
(This post was last modified: 15-01-2018, 08:11 PM by BlueKelah.)
Actually facebook has critical mass but can lose its monopoly and relevance quickly if it dun adapt or like Microsoft buy out the competition. Instagram would have taken out fb if not for the 1billion buyout in 2012
Back then a lot of younger people I knew were moving to instagram.
Remember yahoo? It was the bomb and leader back in the days of browser war and search engines. We all need search engine that's what the speculators said...
But Mark still running fb somewhat and he is smart fellow. Once he leave fb for sure will start to rot, just like apple and yahoo did when their founder stopped taking care of the biz.
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First i have to disclose that i dont use fb anymore. So what i m stating would just be an academic exercise:
- Social networks like Facebook have deep competitive moats. Why? Because switching costs are high - once u invested time and energy to build up the social network, u probably wldnt take the trouble to rebuild them again in another place, right? (esp it is free to maintain them now)
- FB's buyout of instagram in 2012 is a master stroke - first u take out a potential competitor, and 2ndly the switching costs are increased.
- My guess is that FB is abit too big to be taken out now. It is like back to the days of Standard Oil under John rockefellar - it had to be broken up by passing new laws due to its "shady practices". The current EU case against google for anti trust is a good example (or warning) for FB. And i guess the recent russia self service ad sales is the wake up call?
As for the yahoo case study, there are multiple other reasons for its decline (both themselves and competitors). It wldnt be wise to use "founder leaves" as a good proxy for its demise i believe.
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16-01-2018, 07:54 PM
(This post was last modified: 16-01-2018, 08:21 PM by BlueKelah.)
(16-01-2018, 06:32 PM)weijian Wrote: First i have to disclose that i dont use fb anymore. So what i m stating would just be an academic exercise:
- Social networks like Facebook have deep competitive moats. Why? Because switching costs are high - once u invested time and energy to build up the social network, u probably wldnt take the trouble to rebuild them again in another place, right? (esp it is free to maintain them now)
- FB's buyout of instagram in 2012 is a master stroke - first u take out a potential competitor, and 2ndly the switching costs are increased.
- My guess is that FB is abit too big to be taken out now. It is like back to the days of Standard Oil under John rockefellar - it had to be broken up by passing new laws due to its "shady practices". The current EU case against google for anti trust is a good example (or warning) for FB. And i guess the recent russia self service ad sales is the wake up call?
As for the yahoo case study, there are multiple other reasons for its decline (both themselves and competitors). It wldnt be wise to use "founder leaves" as a good proxy for its demise i believe.
For younger generation and IT savvy the barrier to switch is actually quite low. Once all your friends start to use another service or the next "IN" social network app/platform, you will follow suit. Its just a matter of putting up a new profile and adding friends. With mobile phone even easier, can just use the phone numbers in the contact list to add. Some of my friends and younger relatives dont bother using facebook anymore, though many are still active on instagram and twitter. I reckon youtube might actually become a bigger platform once social media moves more to video as it is more of a live thing and a lot of younger people are now more used to doing live feed and videos. There is a gaming streaming network twitch.tv which is gaining a lot of users now as online gaming and esports become more and more popular.
FB for now is quite big and is the incumbent and probably wont be so easy to be taken out, but with too many parts, unless the CEO is competent, things can fall apart and all businesses eroded by competitors. Here is a list of acquisition they did including popular Whatsapp for 19billion in 2014. Most of the other companies are not really that impressive.
https://en.wikipedia.org/wiki/List_of_me...y_Facebook
AS for Yahoo, there are probably many reasons one can come up with for Yahoo's decline. But for innovation driven tech companies, IMO founder and their vision + control is probably one of the most important and critical factor. Carl Icahn and friends probably should have got Jerry Yang to stay on instead of kick him out. In fact, Yahoo would have had an even uglier decline if not for Jerry Yang's genius investing in Alibaba. Actually we should call the company Altaba now since Verizon has bought over almost all the yahoo internet business except for Yahoo! Japan.
Can you imagine what would happen to Tesla without Elon Musk? :O
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16-01-2018, 10:18 PM
(This post was last modified: 16-01-2018, 10:33 PM by Wildreamz.)
Great points brought up, weijian and Bluekelah. My 2c:
1. Switch cost of Facebook - Or any dominant incumbent product.
It is actually quite simple to get people to switch: the new product needs to be drastically better than the incumbent (not just slightly better), in order for people to even consider switching from it. Facebook serves it's purpose very well (creating an online public profile, reaching people and getting reached by people, organizing events, getting trending information etc). The fact that Google won Yahoo, is also very simple, they had a much better product. I tried going back to Yahoo for a moment, and everything takes more than twice the time to find.
Once Google controlled the Web Browser on Desktop and mobile operating system, it is basically checkmate.
2. Social Media is complex.
Social media is actually a pretty dynamic business. Yes, it benefits from economies of scale, but it also faces the dilemma that younger generations always want to stay on different platform as their parents' generation (it's not cool anymore). Hence, if everyone's parents are on Facebook, younger generation would be driven to a different platform (at the moment its Instagram and Snapchat). If Facebook is smart, they would try to develop a new platform for every new generation. Which they did, the purchase of Whatsapp and Instagram is a few of such move. They also tried to purchase Snap but was turned down. Now, they compete fiercely with Snap, copying their every new feature. Chatting apps like Whatsapp, is likely the new/future frontier of social media. I increasingly see trends that my family and friends are sharing meme's on Whatsapp groups (they are basically using it as Facebook).
Then there is the challenge that computing hardware changes very quickly: PC->Mobile (phones got better)->Mobile Video/Photos (phone cameras got better)->AR/VR?
I feel that the people at Facebook is no doubt the expert on all these trends, and is constantly buying up young startups (Occulus, Instagram, tbh, Whatsapp etc.) and developing new platforms (Facebook Business, Instagram Stories, Messenger Kids etc) to secure the mind share of every generation and demographic.
3. The Importance of a Visionary CEO
No doubt this is important, and is even more important for a dynamic tech company. Mark Zuckerberg is a social media genius in that regards (almost everyone including Microsoft, Google and Apple, tried their hands on social media and failed before Facebook). And he is purpose driven, and thinks deeply on the social implication of Facebook as a platform ("to connect everybody", "to build communities" etc.), a rarity for company CEOs (usually profit driven). And this, I feel is a plus. Working for a higher purpose, is a better driver of success, instead of working for the money alone.
In addition, he (or the people around him) is also a balanced business leader, that doesn't completely disregard profits. In fact, the rate and efficiency of Facebook monetizing their networks over the past few years, is nothing short of impressive.
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01-02-2018, 12:37 PM
(This post was last modified: 01-02-2018, 12:38 PM by Wildreamz.)
https://investor.fb.com/investor-events/...fault.aspx
https://seekingalpha.com/symbol/FB/earnings
Facebook Q4 2017 Earnings
January 31, 2018 02:00 PM PT
Highlights:
* Revenue +47.2%
* EPS +57% y-o-y
* TTM P/E = 30.8 (assuming $190 per share)
* Forward P/E = 22 (conservative growth estimate of +40%)
* PEG = 0.77
Classically undervalued company?
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01-02-2018, 03:33 PM
(This post was last modified: 01-02-2018, 03:39 PM by BlueKelah.)
(01-02-2018, 12:37 PM)Wildreamz Wrote: https://investor.fb.com/investor-events/...fault.aspx
https://seekingalpha.com/symbol/FB/earnings
Facebook Q4 2017 Earnings
January 31, 2018 02:00 PM PT
Highlights:
* Revenue +47.2%
* EPS +57% y-o-y
* TTM P/E = 30.8 (assuming $190 per share)
* Forward P/E = 22 (conservative growth estimate of +40%)
* PEG = 0.77
Classically undervalued company?
(vested)
Basing valuation on this like Earnings growth is growth investing not value investing. Forward PE/PEG are speculative measure as well.
Company is also not paying any dividend, just doing SBB, probably not intending to do so either, despite having spike in free cash flows.
Facebook has recently been impacted by new tax laws. Also they have jacked up their ad prices by 40% in anticipation of less hours users going to spend on their feed. I am not expert about ad world but during bad times, companies will usually cut first their advertising. How long do you think this boom times will last?
Just like all the other FANG stocks, since Nasdaq and american markets already all time highs and bubble formed, I would say Facebook is classic overvalued company 
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