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Facebook: an IPO I’ll buy because FB will be the winner on mobile computing! February 21, 2010

Posted by deminvest in Facebook, growth stock, Internet stocks, investment, investment strategies.

facebook mobile

Facebook can be the center of mobile computing. Most of our mobile computing could be Facebook.

The main use we do of mobile phones is to exchange real-time information with our friends. What if we can find that information on their Facebook page on our smartphone?

Why should i call or text someone to know where she is, if today she has turned on a localization service on her mobile facebook device to let me know?

Why should I call all my friends to tell them I’m organizing a party, if I can just change my Facebook status to “organizing a party”  and they can comment on it to let everybody know they are coming. Facebook status connected to Geo-tagging

This guy is wrong as he expects Facebook to build a smartphone, but he is right to say: when he writes that “Facebook Could Transform Mobile Phones”


1. andrew - April 27, 2010

All nice and beautiful, but what’s the business model? how are they generating $$? Youtube is beautiful, but last time I checked it was still looking for ways to generate income. Until I see they’re cashing in $ I would start to get my attention. I think it’s just a matter of time before some better tool will come to light and eclipse facebook. Look what happened to MySpace 😉

2. deminvest - April 27, 2010

They are actually making money from advertising. They only sell very few ads. Still they make enough money that what it takes to cover their expenses.


Facebook has great insight of their customer’s lifestyle. They could easily make great profits with advertising, but it isn’t their style to flood users with ads.

Facebook is now at the point where Google was when it was ads free. Google hated banner ads, so they invented the Adwords keyword auctioned text links.

Facebook is now looking for innovative new ways to make money. A micro payment system on Facebook may be an interesting option. They could ask some royalties or commissions from Gaming companies Zynga, which makes big money selling seeds on Farmville and virtual guns on Mafia Wars. http://www.gamezebo.com/news/1283

Facebook could make the money on mobile ads or use the founder’s creativity to find something yet unexplored.

Facebook is very different from Youtube. Facebook’s costs are a fraction of the huge bandwidth expenses necessary to stream videos.
YouTube began testing the waters with a movie rental service late last month. If successful, it could become the iTunes of movies and kill Netvibes.

Right now Facebook’s main target is to reach one billion users. They will soon make it and shift their focus on making profits or on mobile Facebook.

Whatever they do, I’m joining throwing $1000 on the IPO. And you Andrew?

3. Andrew - April 27, 2010

“The site is quickly discovering that advertising models that worked with search and other web services aren’t necessarily effective in social networks. The click-through rates for ads on Facebook have been described as dismal. Zuckerberg says Facebook is still experimenting with different approaches and will find the magic formula for a revenue model that works for his site.”
“Still, in Internet years, three years is a long time. For all we know, some future Harvard dropout is developing something now that will unseat Facebook.”

I’m 10% yes, 90% no (won’t buy the stock) 🙂

Would you have put $1000 into MySpace when it came out if it had gone the IPO way? (before facebook even existed)?

4. deminvest - April 28, 2010

Thank you for posting the link. The tiny click through is very interesting. Actually dramatic for Facebook. Advertising would be enough to make Facebook profitable, because of their low expenses, but not enough for Facebook’s ambitions.
Tiny click through, little expenses, little revenue, little profits, huge audience growing toward a Billion users. This is what a Facebook IPO wold probably look like today.

They do have to find a new revenue model. I think they will.

I actually hope their IPO comes before the business model. My IPO buy would be cheaper that way 🙂

I would not have bought Myspace, because I didn’t like the service. It was not new, compared to Friendster, to SixDegrees.com and to
Facebook is different. It is Web 2.0. It aggregates great external developers and is interfaced with most websites, applications and technologies developed in the last 2 years.
Because of that, Facebook has basically won the war for social media. Its users are growing fast. It serves everyday twice the pages served by Yahoo. It is overtaking Google, as you can check on Alexa:

Almost everybody I know has a Facebook profile.

Facebook is for real. Of course risk is involved. I did take risks when I bought BAIDU shares. They were leaders on China search, competing with Google. They had a huge audience, but they only had a tiny $100 Million revenue. I paid P/E over 93. BIDU is now over 400% up. It can be worth taking risks on a fast growing market leader. Specially if it is an innovative global market leader.

At Facebook they will experiment and find a real business model. Or they will hire someone who will.

I may be sending my CV for the job 🙂

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