May 19, 2012

Opinion: Why I Think Buying Facebook Shares is a Bad Idea

Filed under: Business,Miscellaneous,Opinion — Jack @ 10:47 pm

Forgive me, but I must rant.  Everyone seems to be drunk or something.  Maybe it’s just the media, but what’s with all the hype surrounding the Facebook IPO?

I mean, what does Facebook do exactly?  It claims to help you connect with the people in your life, but are we really connecting via internet chat and random posting?  Do I really need to post pictures of my morning coffee?  Do I really need to see candids of your one night stand from Wednesday? It’s like every die hard Facebooker is vain enough to think that he is in his own Truman Show, and that everyone else wants a minute-by-minute recap of all his inanities.

In my unqualified opinion, and I may be proven wrong about this, I believe Facebook sees the end of its social domination coming on the horizon. Going public surely appears to be nothing more than the private shareholders desperately wanting to cash in their chips while the picking is still good.

Please remember that Facebook has already made its founders incredibly rich.  Does it still have room to grow and create profits for all of the new shareholders?  That seems highly doubtful.

After all, it used to be all about the user, but like most “freemium” services, it quickly became more about making as much loot as possible.  This lead to a lackluster user experience that became increasingly convoluted with ads and other-non essential fluff.

And let’s not forget that somewhere along the way, they decided to start selling the intensely personal information of each and every one of the estimated 901 million users (as of March 2012, according to Facebook). Do you want fascist regimes buying up all your personal likes and preferences so they can use psychology against you in their marketing schemes, convincing you to buy their crap?  Well, that’s what you are investing in when you buy Facebook shares.  Hasn’t any one read 1984 in this generation?

I would also like to point out several which you may or may not be aware of:

  • Having nearly a billion “active users” on a website requires massive resources.  Maintaining that kind of server load requirement is costly to any company.  It may be getting too large for its own good.  If that’s the case, it sure would be nice to pass the buck to new shareholders.
  • Many of the “users” are businesses or people with multiple profiles.  So, clearly there can’t really be 901 million active people using the site.  Deceptive statistics, maybe?
  • Many of the “users” are spammers.  How many times do you get friend requests from people you don’t even know that start spamming you immediately after you approve the request?  I’ll wager it happens fairly frequently.
  • “Friends” aren’t the same as real friends.  Real friends need to breathe, eat, drink and sleep.  “Friends” remain tucked away on Facebook, waiting for you to log in so they can suck the lifeblood out of your social life.  Real friends will listen when you need to talk, while “Friends” may not be available on chat.  Real friends are always willing to lend a helping hand. “Friends” don’t have hands.
  • Many of the “users” click ignore on your posts.  So, you do have your own Truman Show in a sense.  It’s just that no one is watching.
  • Finally, 80% of the “users” are outside of the US and Canada.

Haven’t we all learned from the dotcom bubble years ago that investing in publicly traded internet companies is risky business?  And don’t forget about the financial disaster that Wall Street, a.k.a. the Den of Thieves, is capable of wreaking.  Simply put, there will always be more losers than winners and the biggest winners are usually the higher ups in the companies that are being publicly traded.

Another thing to consider is that in addition to their ostentatious cash bonuses, CEOs and other board room execs are often given bonus shares or stock options on a regular basis as part of their pay.  This bothers me.  By giving these shares away, isn’t the value of the other shares being diluted?  It pains me to see hard working people pay $38/share of an imaginary something that will be given freely in large quantities to the already super rich board members.  With so much padding at the top, what’s left for those coming in at the bottom?  Will there be any return on the investment at all or is it just thinly veiled thievery?

If you have disposable income at this point in time, wouldn’t it be better to invest in something tangible like real estate, gold, silver, livestock or other natural resources?  I certainly think so.

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