Apple missed. Amazon missed. Facebook effectively missed (by not beating) the estimates. Zynga missed. Many think these are the true signs of a bubble which will soon burst. “Winter is coming,” they say, it will not be nice, they say.
Lately, more and more people with a business and/or financial background — certainly not technical — talk about overvalued hype and extremely high valuations of tech companies. While it’s true to a certain extent, to fully understand how the Tech Market works we ought first to understand Tech.
Being against the bubble point-of-view, I think that analysts, brokers and Wall St investors are not capable of understanding Tech to invest in Tech. And hopefully, Zuck has shown (as Jobs did) how less Tech could care (long live hoodies!) This post’s goal though, is to elaborate on why investing in FB or GOOG is pretty awesome in the first place despite missing quarterly results. And why you should always look the bigger picture.
While Facebook did not actually miss, it either didn’t beat the estimates. This is still a reason for investors to under-appreciate Facebook.
The Current State of the Web Facebook
It is true that users have started using mobile much more than desktop, thus, effectively, Facebook (and others) lose desktop users = ads = ad revenue. And in the same time, all these web services have to figure out ways to monetize the (up until now) under-monetized mobile. Be it either web or native apps.
Facebook has shown and put some early groundwork for this. Trending/Recommended stories appear, behave, feel and fit entirely better on mobile. Other ways to monetize mobile are Instagramn (d’uh! – think of all the photo-related (people/faces, location, time, sentiment stimuli, etc) data that can be exploited), not-yet-installed apps, promoted pages’ stories and more.
But the biggest think, in my opinion, will happen (primarily) on the desktop web. The best thing? Rumors speculate about a post-Fall launch.
The Facebook “Google AdWords” mother-effin’ equivalent. Wait for the moment when every user, web developer, administrator, blogger, etc can embed Facebook ads directly in their website. Fully personalized ads based on your likes and interests outside the walled-garden of facebook.com — just like the Like button. Much better than simply your search and browsing history, eh?
And why Google is still in the game
Google, unfortunately, had taken a wrong direction the past few years. A more “social” one; desperately spending energy on attempts to build social networks or at least hugely social-driven products. On the other hand, Google+ is great – its problem is the non-sticky user experience and not high user retention rates.
But Google magically transformed and managed to inspire again. Google Glass to the rescue! Project Glass has a gigantic potential, radically transforming our lives with entirely new paradigm shifts. Edit: Quoting a post of mine about “The next big thing” and Google Glass:
I love its potential. And for the nay-sayers: no, you don’t look stupid, on the other hand it’s pretty cool — you look like Vegeta and, please, oh please, just imagine the potential. Retina-embedded layers.
Retina embedded fucking layers. The awesome is too damn high! (End of edit.)
The Google Driverless Car should also should not be forgotten. Eric Schmidt did recently praise it a lot; that’s a huge plus. This will be another extremely important game-changer and paradigm shift for our lives. Be prepared.
What is this all about
The point is a huge potential (generally in the Tech market – not only about Facebook and Google) is ignored because of Quarter-to-Quarter estimates and analyses. I can’t say where you should invest but what I can say is always before investing try to see the bigger picture and trends, don’t get focused on short term but rather in the long-term. It took Apple almost a decade — and maybe even more — to be to this exceptional point today. Don’t be fooled by greed or try to be fast paced; stock market is not Forex.
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Disclosure: I don’t have a lawyer but if I had he’d made me include this: This is not financial advice, dude. I don’t have any responsibility for your actions.
PS: Opening line by @tim. Thanks, Tim.
Nice read.
And thanks for the warning at the bottom of the article :-)
Thanks, Thomas. Glad you liked it.
I liked your article as well as your points. However I would like to ask you how can an investor or trader be persuaded for the high potential of a tech company such FB when this company from the first day of its floatation till now is moving like a ” cardio gram ” indicating the high instability and uncertainty? Moreover, don’t u think that is it time for such companies to show signs of future potential through actions in order to appeal investors? If yes, why till now none of them did it? Apas u have to realize that market and investors do not have a plenty of time, markets are changing every day so when u refer to long term, it is better to perceive that we talk about a short-mid term ( maximum 5 years) and not about a “Century” term!