What is Facebook’s Business Model? Worth $50bil? Uhm..No.

It seems that Goldman Sachs feels Facebook is worth $50bil. But Goldman Sachs makes money by finding suckers for bad investments and profiting off them. If I was Mark Zuckerberg and Goldman came to me with this offer I would take it.
I have two points of discussion here. One to enlighten you. The other to get some answers maybe. The reason Facebook would pursue this arrangement with Goldman is financial and market driven. The law states that once a certain number of people own shares the company must go public. It is capped at 500 Owners. We all know to attract talent start ups offer stock options and ownership stakes. They do the same to attract investor capital. If Facebook was worth $30bil today on the stock market wouldn’t they be going IPO in less than 2 secs flat? The reason they have not gone public is because the inflated values are all lies. Trust me on this.
So what Goldman wants to set up is a way Facebook can sell parts of the business so they can hire more workers and keep their investors happy. Remember they have 2 key investments making Mark Zuckerberg sweat at night. One is from Russia valuing the company at $20bil and one is from China valuing them at $30bil. If Facebook could go public at $50bil these two men make a killing. These two men got their money from shady business deals based on Government graft and underworld connections. Though they are trying to be legit now, just like all Mafia organizations want to be some day.
Now comes the basis for the valuations. A stock’s value is based on future earnings. The only successful product Facebook sells is Facebook ads and a share of Social Gaming from Zynga. Nothing else has been a revenue generator for them of any note. And most never will for various reasons. I have already proven there has been a 25% decline in time spent on their network. The Brand Fan pages make no money for big business. Open Graph, Places, Deals nada zippo yawn. What is their business model?

Adpulp just sent out a news letter. Only 33% of all Facebook users have become a Fan of a Brand!!! So 200mil. Of which only half log in each day. 100mil. Of which only 30% live in the US. 30mil. Whom are using the network less and less. I have already proven half the people who log in do nothing. 15mil. So you have a pool of 15 million active consumers you can possibly reach every day via Facebook. Hmmm…the Twitter looks better and better.

You can see which companies are valued over $50bil yourself. Only 43. Is Facebook worth more than Boeing? American Express? Ford? Target? Kraft Foods? You tell me. Facebook has nothing that will prevent people jumping for better technology when it arrives. They have done it before over and over again. Think AOL or Myspace. Great examples. 
Tell me you are not a….
Authors Note: The 15mil people in the US I calculated represents the number of people 1] logging into Facebook today 2] have also Fanned a Fan page and 3] will do something on the site other than read ie: post a status update, comment on a post, or click the like button. All this comes from Facebook’s own stats.
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About chiefalien

Howie Goldfarb with 20 years of Sales and Marketing experience founded Blue Star Strategic Marketing in central Vermont to serve as the objective and strategic adviser of brands to help them grow and thrive. His Degree in Finance and 14 years of B2B sales to Fortune 500 companies gives him a CFO’s view of marketing. Thus bringing a dose of reality to the confusing world of jargon, spin, and hype. Also playfully known as the Chief Alien of Blue Star Strategic, Howie relishes his role as an industry outsider. A native New Yorker and former Angelino, he currently lives in the Green Mountains of Vermont and is still seeking his first moose sighting. His passions are living life, art, music, the outdoors, he tries to cook and loves the Vermont Fresh Network – local sustainability initiatives like farm to table and buying local.
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