In the world in which we live and flourish, perception means everything. We buy certian cars, houses and clothes to give others a certain perception of us. We attend specific universities and pay in $100 bills to imprint our identity on those around us. Perception rules our lives. The perception of Facebook since their lift off has been nothing but horrific. Does this perception mean they deserve to lose over $40 billion of market cap? No. Though, perception rules our world and as of late Facebook has a negative perception in the eyes of many (or those that matter in the investing world). In due time the perception will reverse and the social media bulls will be rewarded.
The plight of Facebook has not been helped by the talking heads or the investors that don’t even understand the workings of Facebook. I constantly hear comparisons between Myspace and Facebook. At this point I find it ridiculous. It just goes to show how many investors fail to understand the ins and outs of a company before they invest. It shows how ignorance encompases the field of investing. Would you have bought into Apple for the iPhone if you had no idea what a smart phone was? A smart investor would have gone to the store, seen the hype, and explored the product prior to putting money behind his or her thesis. So for all you fools that claim that Myspace and Facebook are one in the same, I have nothing to say to you. You have failed yourself as an investor, because these products are galaxies apart. My mother and her generation did not even know what Myspace was but today she checks her Facebook daily on her iPhone. Event planning for a mass majority of individuals is done via Facebook. That is just a mere example of what separates Facebook from Myspace, oh yeah and the difference of about 870 million users at there peak (though Facebook is still growing strong).
the hatred for the Instagram deal astounds me. Everyone fails to grasp how great of a move it is. Facebook just made an aggressive move against Twitter. Instagram has a majority of their postings on twitter or is linked to twitter. Zuckerberg showed some cojones and marked his territory and now the world is mad at him. The best tech companies are the ones that protect their best interest and hinder that of their competition. A picture says a thousand words, or rather, a picture says everything a profile description says. Facebook wasn’t going to miss out on the next thing, it’s going to integrate it to be part of its platform. The move was pricey, but a must, and it shows that Facebook is here to stay one way or another.
For those you that are not so familiar with the social media environment, Facebook’s competition twitter is set to make a billion in about two years. This should come as a giant surprise to many being that Facebook and all other social media stocks are headed directly to zero. For those of you who believe in the story of Facebook, that has been far from a fairy tale, this should be some conformation in your beliefs. These companies are making money and growing at rapid rates. Though Facebook has failed to monetize mobile yet, it will, and it will do so at the same time as protecting the user experience. Zuckerberg understands that there is a need to balance profits and user experience, because without users Facebook has nothing.
Don’t believe the talking heads or the poorly written articles by individuals that have never traded or held stocks. I rode LinkedIn down from $80 to $60 last year then back up, pulling out my hair, fearing for a portion of my portfolio the whole way. Do you know what the know it all skeptics said? They said it was worth $0.00. It was worth nothing, absolutely nothing. Now, today, it is the social media stock to own. So don’t get your panties all in a wad, perception can change overnight. In due time Facebook will prevail because it didn’t become a giant by luck. It may be a long road, but Facebook will be a stand out in the end.
A must watch below.