Ever since its initial public offering, Facebook has been slammed as a prime example of a company whose economic reality couldn’t live up to the hype surrounding it. Its record in India might turn out to be no different.
When Facebook’s share price started tumbling down since its listing two weeks ago, not everyone was surprised. In February, as soon as its numbers became public, Aswath Damodaran, a finance professor at NYU Stern School of Business, valued the company at $72 billion. It made a debut with a valuation of $100 billion, or 100 times its earnings. Apple’s, by way of comparison, is about 14 times its earnings. Many analysts expected the price to drop, and it did.
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(This story appears in the 22 June, 2012 issue of Forbes India. To visit our Archives, click here.)
I think facebook, on the contradictory, is underestimated. This seems to be a premature, rather immature, obituary of a social media giant. Facebook, compared to Google, has a better advertising platform in India, like the payment options (FB accepts amex while Google does not ). The analytics vs insights are on equal level playing platform. And yes, facebook is still innovating ways to monetise more. Advertisers in India are bound to push their budget spends from search to social. They just need to be educated better. On the other hand, Twitter is making more loses, Pinterest is yet to monetise, and YouTube has recently begun with advertising. Social is a growing baby, while search is in the spring of youth. Also, Facebook largely serves as an entertaining medium while Google search engine is usually purpose-based. When Facebook develops a strong purpose, on the back of strong social network tools, it will be a very robust applicationon Jun 13, 2012
A very timely article on a relevant topic. India may actually be a microcosm of all the challenges that Facebook faces from now on. Even in developed countries, its revenue model isn\'t exactly robust and settled and is still in an evolution mode. While the article has raised important questions, perhaps there is room for understanding Facebook\'s strategy in its own eyes. Who is running the social-network company in India? What is their vision? What are their practical hurdles? What about India\'s policy increasingly resembling China\'s as far as free speech is concerned? Even though FB\'s IPO document mentions India, is the country really at the top of its priority list or was it just lip service? This is the kind of stuff I would want to read about next. But congratulations on a good story.on Jun 12, 2012
Why is FB not looking and learning from @ lil indian mobile social companies who are doing interesting work in engagment driven advertisement. in my work as a analyst i came across Rocketalk and saw their ad monetization startigy in practice was really impressed with their ability to place brand in the center of content, i think its a very scalable model, others who seem do be doing decent work is vuclips.on Jun 12, 2012
The big challenge for Facebook would be to monetize mobile users, esp. since over 50% of FB users worldwide access the social network on a mobile device. Google owns search, FB cannot simply use web 1.0 models of banner ads and juice its audience base. Twitter tried it with sponsored tweets but the jury is still out if consumers would allow an advertiser to invade their personal space. A couple areas for FB to make money may be revenue share with app/game makers who leverage the FB platform, charging a small fee for FB authentication, premium business pages, sell analytics (aggregate how many users are talking about a brand/category, sentiment analysis, reputation monitoring). Since charging for subscriptions would prove suicidal, its an exciting phase for FB to devise unique advertising models.on Jun 12, 2012