FaceBook Value and Speculation or Investment ?

I’m not one to usually comment on an individual stock but so many have asked about FaceBook that I feel compelled to contribute my view.

1) Is FaceBook Growing? The only figures I’ve heard for months is the 900 million users number. Therefore there has been very little, if any, increase in month over month FaceBook users.
This is a red flag!

2) What is a FaceBook User? Based on current information a FaceBook user is someone who has a FaceBook account. Let’s keep in mind that it is almost impossible to close a FaceBook account. Therefore; out of the 900 million users 200 million are basically non-functioning accounts.
NEW TOTAL 700 million users.

3) Let us also figure that one person can and usually does have more than one account. Therefore; out of the 700 million users 200 (account holders) million users have two accounts.
NEW TOTAL 500 million users.

4) Now lets look at what reality can define as an active user. An active user can be defined as signing into their FaceBook account more than once per week. Therefore; out of the 500 million users or account holders there are 200 million users who do not sign into their FaceBook account more than once a week. Now we are down to 300 million active users.
NEW TOTAL 300 million users.

5) What FaceBook wants you to believe;
900 million users dived into 100 billion dollar stock offering equals about 1,111 dollars per user.

6) Now let us use the 300 million ACTIVE FaceBook users;
300 million users into 100 billion dollar stock offering equals about 3,333 dollars per user.

You can see how the actual price paid per active user triples from $1,111 to $3,333.

Let us also consider the fact that the major owner and CEO of the company never really wanted to let his GROWING company go public. Then one day he woke up and said “I want to go public”. No he did not. He and his consultants and board members said “our growth has stalled and now is the the time to go public”.

What FaceBook did was offer to the public the next two to three years of POTENTIAL growth.
In other words purchasers of FaceBook shares just paid what the company may be worth in 2015. That is a three year wait and see investment at future par value.

Therefore one might believe that a current investment in FaceBook is speculation and not an investment.

Does FaceBook have the potential to monetize and become a major player? My view is that it is surely possible but the road ahead has several major turns (generating a profit) and unpredictable storms (competition) in it’s path.

This link added on 5-25-12 “5 signs Facebook hates its shareholders”

This link added on 6-13-12 What Facebook Stock Is Worth?

I hope the above trading information was of help to you.

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.