The Best Social Network Is Uninvestable

By Michael Lewis, The Motley Fool

Web 2.0 has been a pain to invest in. I think we all understand that the social revolution is well under way, and that its value is, though tough to quantify, truly undeniable on a global scale. But in its infancy, profits seem tough to find and a long-term vision for monetization is … well, tough to find. There is one social network that I believe has a solid business plan, that is ready to create real, significant cash flows, and that is way too expensive to warrant a dollar of your savings.

Social warfare
When the unfortunate term “social networking” rears its ugly head, the first thing that comes to mind for most is Facebook (NAS: FB) . The company helmed by somebody who looks like he could have been on Growing Pains is, no doubt, going to be an amazing investment when the company figures out how to leverage the billion people who use the service for free. I don’t know when that will be, how the company will do it, or even if I will still be shamelessly self-promoting myself on my own Facebook page. As for now, Facebook and its so-so business model remains on my “Ha-ha, you’ve got to be kidding me” list of stock ideas, not far from Green Mountain Coffee Roasters.

To be fair to readers, I won’t go over again my personal reasons for my distaste for Facebook, but my investing-related issues are highlighted in fellow Fool Alex Dumortier’s recent article. Plainly put, Facebook simply can’t measure up to market expectations anywhere in the near future. Not while earning $3.50 per user in revenue.

My smart money (term used as loosely as possible) would likely go to the other popular U.S.-based social network if it weren’t for one thing — the rent is too darn high.  Read More


About Rant4u

A Revolution in Social Networking

Posted on August 2, 2012, in social networking and tagged , , . Bookmark the permalink. Leave a comment.


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