In stocks, companies have a price-to-earnings ratio. A price-to-earnings ratio is defined as a measure of the price paid for a company for a share relative to the annual net income or profit earned by the firm per share. According to a radio broadcast on NPR, the big US companies, such as Apple for example, have an average price-to-earnings ratio of 15. But Facebook has a ratio of 100.
I found this extremely interesting, but not greatly surprising. Almost a billion people use Facebook nearly everyday so such a ratio my be expected.
Because of these profits, investor believe that Facebook is going to "explode" as one would say. Currently Facebook is trying to convince their investors to have Facebook to become a "platform for ads".
The company has all the information about its billion users and can use whatever that person searches or updates on their status. They could use this information to generate ads just for that user. Also, your friends on Facebook could help sell stuff to you.
I personally do not like ads on the internet. I find them generally annoying. For example, on YouTube, they have ads everywhere. The place them at the side of the page, at the top of the searches and even before the actual videos. I believe that if ads overrun Facebook, it could possibly lead to Facebook's downfall.
Facebook does have ads. Last year, Facebook sold more that $3 billion in ads, but television sold $68 billion in ads globally. I doubt that this gap in ads sold will not work. Television has been around for half a century and had built up this self industry of creating advertisements. It would take many years for this gap to become equal or surpass... if it will ever happen.
http://www.wbur.org/npr/152736516/is-facebook-worth-100-billion
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