Traffic doesn't pay the bills. At some point, all businesses come down to sell something for less than it costs to make it.
Apple is very good at this in the traditional sense. Google has found a way to sell people who are looking for something to people who are selling that thing.
Facebook? The jury is out. They can capture a lot of attention. Right now, the easiest businesses to compare FB to are TV networks. Unfortunately, people don't really like being interrupted by a few-minute-long commercial break on the internet.
Where is Facebook in 5 years. Either they figure something out, and are huge, they find a small niche profit source, or they go the way of AOL circa Y2k. How you rate the likeliness of these outcomes determines how you should price the stock.
Apple is very good at this in the traditional sense. Google has found a way to sell people who are looking for something to people who are selling that thing.
Facebook? The jury is out. They can capture a lot of attention. Right now, the easiest businesses to compare FB to are TV networks. Unfortunately, people don't really like being interrupted by a few-minute-long commercial break on the internet.
Where is Facebook in 5 years. Either they figure something out, and are huge, they find a small niche profit source, or they go the way of AOL circa Y2k. How you rate the likeliness of these outcomes determines how you should price the stock.