Thursday, February 9, 2012

The Facebook IPO Post

I could probably write 20,000 words explaining why this is a pump and dump scheme. Why you should buy Apple not Facebook. Why Facebook can't be worth the same as Pepsi who has 18 different $1billion brands or Cisco Systems who kind of owns the internet infrastructure world.

I could share 15 great links discussing why this is $100 billion value is crazy stuff. Or my 29 blog posts exposing their misleading activity numbers or how use per person per day is down over 50% since April 2010 (fact).

Instead I am going to link their S-1 filing.

Page 76 Facebook gives proof their main revenue stream which is paid advertising works:

Procter & Gamble chose to advertise on Facebook to generate awareness for Secret deodorant's "Mean Stinks" program and selected a female audience likely to be receptive to the campaign. The ad featured a confessional-style video of a girl admitting that she had bullied others, realizing the damage she had caused, and apologizing. In the 26 weeks after the Mean Stinks campaign launched, Secret experienced a 9% increase in U.S. sales and an increase in engagement with its Facebook Page.

CM Photographics, a wedding photography business based in Minneapolis, Minnesota, used Facebook ads to reach the users it cared most about: women aged 24 to 30 living near Minneapolis who shared their relationship status on Facebook as "engaged." Over 12 months, CM Photographics generated a significant increase in revenue after running a $600 advertising campaign on Facebook.

All these years all these ads and these are the TWO they got to cherry pick. The first for Proctor and Gamble has the nerve to claim a brand that does so much TV advertising (never mind non-Facebook digital) over 26 weeks parallel to the Facebook campaign had a 9% sales increase (whopppeeeeee) all due to Facebook? And they give no details on when this campaign occurred. And the second tells us nothing. No proof, no stats, no sales, no conversions. Both campaigns fail the CFO - ROI test. This doesn't mean they were failures but the reporting fails. Imagine on a book report I said the sky is blue because in daylight it is blue.

The rest of the 'Business Section' bullshit should be enough to scare investors. But why would a stock broker recommend you buy it? To flip it. Any brokerage who's income is not tied to your long term profits cares less if the stock tanks and only cares about the commission for the buy and sell.

And for this you will pay a $100 Billion value?

1 comment:

  1. much are you going to buy BTW?