When will the Facebook bubble burst?
It will not burst in the nearer future…
…That is being said by me the “Trader” with more than 20 years of experience, who has seen a number of crashes and who analyzed the bubbles from the past as well, such as for instance the tulip bulb crash
For the time being we are far away from the sentiment as we had it back then during the high-tech bubble. At that time almost everyone was excited and very bullish and banking apprentices spread hot tips on what to buy. In hour days only “a few” marketing specialist are excited about social media.
Although we human are not very adaptive, in relation to investing we remember at least what happened the last 10 years. That means we still remember what happened in the dot-com bubble and will not repeat the same mistakes for now
Should stock prices, which are mainly driven by the central banks printing money, drop sharply then of course the Facebook stock would follow the trend as well. Of course there will be a social media bubble. Of course it will burst, as bubbles, such as the tulip bubble in 1637, always do. It just will not happen in the nearer future
It will not burst in the nearer future...
…and this time it is being said by me the “Social Media Specialist”
We the older generation, have mostly no clue what is really going on Facebook among 15 to 25 year olds. In most cases here the principal is “I Facebook therefore I am”. Half of the younger generation's life happens on Facebook. For instance Party invitations are sent more and more only on Facebook. Not on Facebook = no party invitation. These guys can hardly imagine not being on Facebook for one day.
Asking them, if they would pay a membership fee, they mostly will answer with no and that they would leave Facebook in that case. At this point in time that is most probably what would happen. I guess it is predictable though, that in the future when these guys earn a more ore less decent salary, they will be able and willing to afford a membership fee for being on Facebook, above all, when Facebook becomes even more important for people’s daily life. Let’s assume a yearly membership fee similar to XING (àCHF 80.-/ USD 90.-). With this membership fee, revenues of 100 billion (current estimated value of Facebook) could be generated within 2 years.
Of course commercially Facebook seems not to be used fully the optimal way yet. With advertisements on Facebook, members cannot really be reached well. I am convinced that another approach is needed and will be found, and that therefore the potential is significant.
