FB - Facebook

[ItsAValueTrap]

I don't think Facebook has a strong moat at all.  Look at ICQ and Myspace... they had network effects until they didn't.  Napster is another example, though its downfall is probably related to its legality.  Switching products is really easy.

 

In regards to Facebook versus Google Search, I think that Google Search has a stronger moat.  I think that with search it is less likely for a disruptive change to occur.  There have been a lot of venture capital and other capital thrown at different approaches to search... I think that what we've figured out that search works best as a combination of techniques:

-Ranking based on links

-Anti-spam/Anti-SEO (this is a very difficult problem as there are several ways to game search engines and anti-spam is far from perfect)

-User behaviour/clickstream

-Spelling corrections, understanding alternate spellings (e.g. if you search for flavour, the search results will also include the alternate spellings, e.g. flavor)

-Refinements to the UI (e.g. highlighting your search term in the results)

etc.

 

This benefits Google as any search startup will have to duplicate/innovate in ALL of those areas.  It's not like the early days when you were able to dethrone other leading search providers by doing things differently (e.g. Yahoo innovated the directory, Google innovated using links to rank searches).

 

Facebook on the other hand is not a mature problem.  And to me it's utility is somewhat marginal as some people intentionally delete their Facebook accounts or never start one.  It's not as useful as search, which everybody uses.

[ItsAValueTrap]

Here is some background information on how online advertising works:

http://glennchan.wordpress.com/2012/09/23/online-advertising-goog-fb-etc/

 

I don't cover ad retargeting but it may be a huge boon to Google's Adsense network and Facebook's ad network.  Historically, display advertising did not monetize very well.  Ad retargeting could change that dramatically.  (Though I haven't really done my research on that.)

[DCG]

I don't think Facebook has a strong moat at all.  Look at ICQ and Myspace... they had network effects until they didn't.  Napster is another example, though its downfall is probably related to its legality.  Switching products is really easy.

 

In regards to Facebook versus Google Search, I think that Google Search has a stronger moat.  I think that with search it is less likely for a disruptive change to occur.  There have been a lot of venture capital and other capital thrown at different approaches to search... I think that what we've figured out that search works best as a combination of techniques:

-Ranking based on links

-Anti-spam/Anti-SEO (this is a very difficult problem as there are several ways to game search engines and anti-spam is far from perfect)

-User behaviour/clickstream

-Spelling corrections, understanding alternate spellings (e.g. if you search for flavour, the search results will also include the alternate spellings, e.g. flavor)

-Refinements to the UI (e.g. highlighting your search term in the results)

etc.

 

This benefits Google as any search startup will have to duplicate/innovate in ALL of those areas.  It's not like the early days when you were able to dethrone other leading search providers by doing things differently (e.g. Yahoo innovated the directory, Google innovated using links to rank searches).

 

Facebook on the other hand is not a mature problem.  And to me it's utility is somewhat marginal as some people intentionally delete their Facebook accounts or never start one.  It's not as useful as search, which everybody uses.

 

Facebook has the ability to build search around people's interests, things people's friends like, and things a lot of people like. This is huge. Google built Goole + specifically for this, but nobody uses it. I recommend reading the first few chapters of the book 'Likable Social Media' for a much more detailed explanation on this.

[Guest valueInv]

I don't think Facebook has a strong moat at all.  Look at ICQ and Myspace... they had network effects until they didn't.  Napster is another example, though its downfall is probably related to its legality.  Switching products is really easy.

 

In regards to Facebook versus Google Search, I think that Google Search has a stronger moat.  I think that with search it is less likely for a disruptive change to occur.  There have been a lot of venture capital and other capital thrown at different approaches to search... I think that what we've figured out that search works best as a combination of techniques:

-Ranking based on links

-Anti-spam/Anti-SEO (this is a very difficult problem as there are several ways to game search engines and anti-spam is far from perfect)

-User behaviour/clickstream

-Spelling corrections, understanding alternate spellings (e.g. if you search for flavour, the search results will also include the alternate spellings, e.g. flavor)

-Refinements to the UI (e.g. highlighting your search term in the results)

etc.

 

This benefits Google as any search startup will have to duplicate/innovate in ALL of those areas.  It's not like the early days when you were able to dethrone other leading search providers by doing things differently (e.g. Yahoo innovated the directory, Google innovated using links to rank searches).

 

Facebook on the other hand is not a mature problem.  And to me it's utility is somewhat marginal as some people intentionally delete their Facebook accounts or never start one.  It's not as useful as search, which everybody uses.

If you want to "reason by comparison" you should conclude that Google has no moat by looking at Yahoo and Alta Vista.  ;)

[Palantir]

I disagree with the comments posted above. Facebook is a great product IMO, and I like using it. G+ on the other hand is awkward and weird.

[Guest Dazel]

http://www.forbes.com/sites/darcytravlos/2012/05/16/facebook-and-the-google-ipo/

 

Here is comparison of the two companies early days...you can see to my horror what happened at Google when I did not buy it.

 

I would really like some criticism of it's over valuation etc from the board...I would like to learn more here...even if it is for a pullback years from now. Get as negative as you can please.

 

It is a small position and we may exit if it continues to go up so quickly " lucky timing".

 

Dazel.

[Palantir]

I bought this at 27.34, primarily as a "momentum" play. Yeah yeah, I know this is a value investing board and that sort of stuff is frowned upon. But I think it is showing strong momentum now, and I think given the quality of the product, the huge user base and subsequent opportunities for synergistic product development, (Facebook retail, facebook phone, facebook search), this could very well become a huge threat to Google.

[ItsAValueTrap]

Why chase these high multiple growth stocks when there are low multiple growth stocks?

 

Google, Apple (it may have historically grown faster than Facebook), IBM are some stocks you could look at.  Google and Facebook share a lot of the some advertising base: people (e.g. affiliate marketers... many of them have blogs) who advertise on Google might mess around with Facebook and vice versa.  They are really similar in some ways.

 

I think that Google's dominance is more durable than Facebook's.  The search engine world is more mature and it's harder to get started and the shakeout has mostly occurred.

 

I bought this at 27.34, primarily as a "momentum" play.

The borrow on the Facebook shares could be expensive.  There may be an arbitrage opportunity for you in options or single stock futures.

 

Here is comparison of the two companies early days...you can see to my horror what happened at Google when I did not buy it.

In my opinion, hot IPOs are generally a bad place to look for longs... especially if VCs are selling the company.

 

Secondly, you should ask yourself if it's in your circle of competence.  Have you ever advertised on Google or Facebook?  Get yourself some ad coupons (companies give them away like candy...), an affiliate account, and figure stuff out.  Or read marketers' blogs.

 

2- Ad retargeting may be a huge boon for Facebook.  It's a much more effective way of delivering relevant ads... it serves you ads based on websites that you've visited before.

 

Ad retargeting would also be a huge boon for Google's Adsense network (roughly a quarter of Google's revenues) and Youtube.

 

In the long run, I think that online advertising will be FAR more effective than TV advertising.  An ad served on Youtube will eventually get a higher rate than an ad on TV.  The ability of TV advertisers to target their ads is in the stone age.

 

*Long 1 share of GOOG, I think Android will kill Apple, I don't have any position in IBM or Berkshire.

[Guest Dazel]

Sold on the run up...quick profit.

 

Did not feel right owning it....need to study more...I do not like small positions.

 

Dazel.

[Palantir]

Facebook has an event on Jan 15th. I'm hoping for a Facebook phone or new web app/service, to continue my thesis as Facebook becoming a Google Rival.

[Palantir]

Some kind of Graph Search....I really have no idea what to make of this.

[txlaw]

http://www.forbes.com/sites/tomiogeron/2013/01/15/live-facebook-announces-graph-search/

 

And the MSFT/FB love fest continues.

[Guest wellmont]

I bought this at 27.34, primarily as a "momentum" play. Yeah yeah, I know this is a value investing board and that sort of stuff is frowned upon. But I think it is showing strong momentum now, and I think given the quality of the product, the huge user base and subsequent opportunities for synergistic product development, (Facebook retail, facebook phone, facebook search), this could very well become a huge threat to Google.

 

 

and what is the intrinsic value of fb? :)  would definitely not get in the habit of "momentum investing".

[Palantir]

and what is the intrinsic value of fb? :)  would definitely not get in the habit of "momentum investing".

 

What does intrinsic value have to do with investing? :)

 

 

EDIT: You might be right, I just lost 10% on a different position that I initiated based on "momentum".

[Guest valueInv]

Yes but that is unproven potential which is simply conjecture at this point.

 

Has facebook WOWed you with their search function, ever?

 

That's kind of my position too. If they can do it, great for them, but I'll believe it when I see it.

 

Microsoft has been trying to do search in one form or another for as long as Google (since 1998, MSN search, and then all the rebranded successors) and what they've got for their trouble is billions in losses.

 

It's kind of like saying that Facebook can just make a smartphone and compete with Apple. Well, if they can, great for them, but I'll believe it when I see it because it's not quite that easy...

 

http://www.wired.com/business/2013/01/the-inside-story-of-graph-search-facebooks-weapon-to-challenge-google/all/

 

Believing it now? 

[Guest valueInv]

Finally, WSJ starts to catch on:

 

http://online.wsj.com/article/SB10001424127887323596204578243552054369798.html

[Guest valueInv]

I get the game now. You have to do badly to push actually your stock price up:

 

http://techcrunch.com/2013/01/30/facebooks-q4-revenue-rises-40-to-1-59b-shares-decline-7-percent-in-after-hours/

[Guest valueInv]

Mobile seems to be gaining momentum:

 

http://techcrunch.com/2013/01/30/facebook-mobile-app-ad/

[Palantir]

I'm going to stick with my thesis that there is no way to value this accurately, so just buy it on relative mins. Because it is arguably worth something substantial and with ridiculous potential.

 

I am long a small position (5%) of my small portfolio.

[Palantir]

Facebook Doesn't Need A Phone. It Wants Them All

 

http://www.fastcompany.com/3005329/facebook-doesnt-need-phone-it-wants-them-all

 

That's because your phone already is a Facebook phone. Android, Apple, whatever--with a strategy to make Facebook tools the go-to apps for everyday mobile living, the device type doesn't matter.

 

This strategy is very much in line with what Joel Osteen proposed.

 

Smart companies try to commoditize their products' complements.

 

If you can do this, demand for your product will increase and you will be able to charge more and make more.

 

When IBM designed the PC architecture, they used off-the-shelf parts instead of custom parts, and they carefully documented the interfaces between the parts in the (revolutionary) IBM-PC Technical Reference Manual. Why? So that other manufacturers could join the party. As long as you match the interface, you can be used in PCs. IBM's goal was to commoditize the add-in market, which is a complement of the PC market, and they did this quite successfully. Within a short time scrillions of companies sprung up offering memory cards, hard drives, graphics cards, printers, etc. Cheap add-ins meant more demand for PCs.

 

http://www.joelonsoftware.com/articles/StrategyLetterV.html

 

 

 

The goal is to have facebook on every phone, so in the end, the operating system and the browser are no longer as relevant, they are commoditized. Now if FB can find a way to commoditize search, GOOG is going to be hurt.

 

[Guest valueInv]

Facebook Doesn't Need A Phone. It Wants Them All

 

http://www.fastcompany.com/3005329/facebook-doesnt-need-phone-it-wants-them-all

 

That's because your phone already is a Facebook phone. Android, Apple, whatever--with a strategy to make Facebook tools the go-to apps for everyday mobile living, the device type doesn't matter.

 

This strategy is very much in line with what Joel Osteen proposed.

 

Smart companies try to commoditize their products' complements.

 

If you can do this, demand for your product will increase and you will be able to charge more and make more.

 

When IBM designed the PC architecture, they used off-the-shelf parts instead of custom parts, and they carefully documented the interfaces between the parts in the (revolutionary) IBM-PC Technical Reference Manual. Why? So that other manufacturers could join the party. As long as you match the interface, you can be used in PCs. IBM's goal was to commoditize the add-in market, which is a complement of the PC market, and they did this quite successfully. Within a short time scrillions of companies sprung up offering memory cards, hard drives, graphics cards, printers, etc. Cheap add-ins meant more demand for PCs.

 

http://www.joelonsoftware.com/articles/StrategyLetterV.html

 

 

 

The goal is to have facebook on every phone, so in the end, the operating system and the browser are no longer as relevant, they are commoditized. Now if FB can find a way to commoditize search, GOOG is going to be hurt.

And they don't need to build operating systems, subsidize devices, build networks, subsidize newspapers, invent driverless cars or map coral reefs to do that. Think about the difference in cost structure.

[LC]

 

And they don't need to build operating systems, subsidize devices, build networks, subsidize newspapers, invent driverless cars or map coral reefs to do that. Think about the difference in cost structure.

Yes but Google has generated SO MUCH customer goodwill by doing all this that customers continue to repay them by using Google search.

[Guest valueInv]

 

And they don't need to build operating systems, subsidize devices, build networks, subsidize newspapers, invent driverless cars or map coral reefs to do that. Think about the difference in cost structure.

Yes but Google has generated SO MUCH customer goodwill by doing all this that customers continue to repay them by using Google search.

;D

[Guest valueInv]

FB is slowly building out its ad products:

 

http://venturebeat.com/2013/02/27/facebooks-new-custom-audiences-tools-for-advertisers-better-package-its-product-thats-you/

 

 

[bobp]

I'm wondering if FB could offer groupon like deals based on your location. Say a restaurant is slow, it could put out a discount offer for the next couple hours or something. As a user I don't want the ads but I might want that. I don't know if most people enable the gps but they might for discounts.