Source Close your eyes and imagine a business that counts more than a quarter of the world’s population as a customer, with most of them spending 1/12th of their day using its products.
I used to own Facebook for the past 4 years (sold last year Sep). Even during Cambridge Analytica scandal, I tripled down as it went lower and for a year it stood as 76% of my portfolio from around 25%. Now the reason I did it because I had higher conviction for the company, i thought CA issue was overblown and stock has been sold off. Now, I can not say the same for FB today. not from valuation point of view, Revenue g YoY is great, margins are great. even today I think it is undervalued. But I have a principle which is don't own anything that is a target in the eye of lawmakers and are susceptible to politics (just like oil & gas companies) Today FB is more exposed to their wrath than anytime in history, now, Dems will control the power for at least 2-4 years, risks are at ATH.(maybe that is why its undervalued). Also, another reason is I used to use all products of Facebook. Now, as someone in 29 yoa, I am fed up with Instagram, FB etc. I find more value in twitter, reddit and tiktok is more joyful than Instagram. Whatever company's stock I bought I test its products before I purchase the stock (even if its SaaS, cloud, and even if I am not a company, I do my best to get more exposure by trying to see how it performs as a product), FB products are not what they were used to be. So, I might be biased here, not sure, but if I dont enjoy the product anymore, especially, I find other more enjoyable, its time to move on.
Nice read, but would humbly disagree on a couple of aspects:
1. Disengagement from FB would require a massive behavioral shift at once: On the contrary, I believe the nature of network moats is a very unstable equilibrium. The same word of mouth publicity that got everyone to adopt a network also accelerates everyone leaving a network. It would require just a handful of really strong influencers (handful being a relative term to its 3M MAUs) to promote FB as an out-of-fashion fad for a whole host of passive "opinion-takers" o follow suit.
2. FB is going to disrupt e-Bay, Shopify: I don't believe that is the case. Catering to the long-tail goes in cycles. First, you find general-purpose platforms such as FB, Google cater to long-tail businesses by helping them set up storefronts. But gradually, these same long-tail communities become big enough to support vertical communities focused on creating a specific value-add. That is where general-purpose platforms like FB can't 'do everything for everyone at scale'.
Hi, thanks for the reply and the feedback. I think point 1 has already been disproven given the #deletefacebook movement clearly had no effect on FB DAU or MAU. There were plenty of people trying to push it, even some of those with influence, and nothing came of it. As for Ebay, etc, FB is already disrupting ebay with marketplace and we will see where it goes in other places. Just my two cents.
I used to own Facebook for the past 4 years (sold last year Sep). Even during Cambridge Analytica scandal, I tripled down as it went lower and for a year it stood as 76% of my portfolio from around 25%. Now the reason I did it because I had higher conviction for the company, i thought CA issue was overblown and stock has been sold off. Now, I can not say the same for FB today. not from valuation point of view, Revenue g YoY is great, margins are great. even today I think it is undervalued. But I have a principle which is don't own anything that is a target in the eye of lawmakers and are susceptible to politics (just like oil & gas companies) Today FB is more exposed to their wrath than anytime in history, now, Dems will control the power for at least 2-4 years, risks are at ATH.(maybe that is why its undervalued). Also, another reason is I used to use all products of Facebook. Now, as someone in 29 yoa, I am fed up with Instagram, FB etc. I find more value in twitter, reddit and tiktok is more joyful than Instagram. Whatever company's stock I bought I test its products before I purchase the stock (even if its SaaS, cloud, and even if I am not a company, I do my best to get more exposure by trying to see how it performs as a product), FB products are not what they were used to be. So, I might be biased here, not sure, but if I dont enjoy the product anymore, especially, I find other more enjoyable, its time to move on.
Nice read, but would humbly disagree on a couple of aspects:
1. Disengagement from FB would require a massive behavioral shift at once: On the contrary, I believe the nature of network moats is a very unstable equilibrium. The same word of mouth publicity that got everyone to adopt a network also accelerates everyone leaving a network. It would require just a handful of really strong influencers (handful being a relative term to its 3M MAUs) to promote FB as an out-of-fashion fad for a whole host of passive "opinion-takers" o follow suit.
2. FB is going to disrupt e-Bay, Shopify: I don't believe that is the case. Catering to the long-tail goes in cycles. First, you find general-purpose platforms such as FB, Google cater to long-tail businesses by helping them set up storefronts. But gradually, these same long-tail communities become big enough to support vertical communities focused on creating a specific value-add. That is where general-purpose platforms like FB can't 'do everything for everyone at scale'.
Hi, thanks for the reply and the feedback. I think point 1 has already been disproven given the #deletefacebook movement clearly had no effect on FB DAU or MAU. There were plenty of people trying to push it, even some of those with influence, and nothing came of it. As for Ebay, etc, FB is already disrupting ebay with marketplace and we will see where it goes in other places. Just my two cents.