Executive strategies change and their outcomes depend a lot on luck. And it is difficult to predict. Most of our discussions about Kodak, AOL, etc. (like this one right here) are with full benefit of hindsight. Look at how Google (or any other big company out there) has diversified. My point is just that: when you have hired the smartest people on the planet and are attracting investment, you have the opportunity to become the next great company. Whether it will happen remains to be seen, and cannot be predicted with simplistic analysis. Especially when investors (whose day job it is to watch Facebook) are still happy enough to invest in the company.
Here's something to ponder: if you could spot the flaw in Facebook's business model so easily, why can't the hundreds of investors who have millions at stake see the same flaw? (Corollary: Bearish folks can make a lot of money short-selling Facebook.)
First, don't confuse stock success with long-term financial success -- they're actually not completely aligned. Ideally, they would be, but many, many investors are irrational and/or uneducated. Many more are smart enough to prey on that and speculate/bet that they can ride the stock up and sell it at/near a peak.
Second, here's something to ponder: If the masses are so good at picking investments, why didn't everyone see the housing bubble?
In fact, some people did -- and they're the ones who were beating the drums about the need to pay attention to fundamentals and long-term trends.
Similarly, many people have been pointing out that the irrational exuberance around Facebook is not supported by fundamentals -- and is, therefore, a bubble.
Here's something to ponder: if you could spot the flaw in Facebook's business model so easily, why can't the hundreds of investors who have millions at stake see the same flaw? (Corollary: Bearish folks can make a lot of money short-selling Facebook.)
Now, why could I spot the flaw in their business model? I don't actually think there's all that much special to it...it's not actually that hard to point out unsound business plans if you pay attention to the fundamentals… which seem to be so easily forgotten.
I have not said that there isn't money to be made on FB as a short-term investment -- indeed, clearly the stock isn't at its low and it's safe to presume some are going to make money off of it. What I did say was that the business model is not sound. That could change, but thus far, I've not been given reason to be hopeful that they'll do so.
Here's something to ponder: if you could spot the flaw in Facebook's business model so easily, why can't the hundreds of investors who have millions at stake see the same flaw? (Corollary: Bearish folks can make a lot of money short-selling Facebook.)