Monday, January 3, 2011

Facebook Overvalued?

Is social networking site Facebook worth $50 Billion? It has finally (and to me this was a surprise, but then, I'm not on Facebook...yet) passed Google as the most visited website in the United States, but still...

There are a growing number of signs that a bubble is building in tech.

Well, hell, our economy has been built on pretty much nothing but bubbles for the past 30 years...what else is news.

The latest and potentially most disturbing: Investors now believe Facebook is worth $50 billion. Facebook is indeed an innovative and very successful company. It has 550 million users, and accounts for about 1 of 4 American page views. And, as you have probably heard, we at TIME named Mark Zuckerberg, Facebook's CEO, the Person of the Year. But the company isn't making that much money yet. Its revenue, while impressive and probably growing fast, is nowhere near $50 billion. And because it has undertaken an unorthodox means of making money, it's not clear when the big bucks for Facebook will start rolling in. It has also struggled with privacy issues. So are the high values for tech stocks, particularly Facebook, setting investors up for a dangerous fall? Perhaps.

Read more: Is Facebook Really Worth $50 billion?

1 comment:

  1. I firmly agree that this would be a great time to short sell Facebook. The internet is all about passing fads, just ask Compuserve, AOL, Altavista, Ask Jeeves...


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