Friday, December 16, 2011

Facebook Ads

This sampling of recent Facebook ads gives one pause as to the value of the company.

Facebook is ready to do its long-awaited IPO.  Should you buy the stock?  Well, probably not.  The first day of trading, the stock will spike as every Joe Paycheck who has done zero research decides to get in on the deal.  And the folks who actually own the company will be happy to sell their stock to you.  But long term, well, a minority stake in a money-losing company is never worth much.

But what is their income base?  Their sidebar ads are illuminating.  Most are low-rent ads for sleazy deals.

The image above was captured today.  The top image is an ad for Classmates.com.  Yea, it doesn't say that, does it?  That is because Classsmates.com screwed the pooch and got such an odious reputation that they are now something called "Memory Lane" and of course, use a name and link (70's Yearbooks) that is mis-descriptive.  It is not until you click on the link and they ask you for State and School and then to "sign up" that you realize it is our old sleazy friend, Classmates.

Gee, Zuckerberg, the company you keep, eh?

One of the other ads is for an online dating service.  Real classy!

And sleep apnea supplies.  Not sure why that links to my facebook page.  Based on age?  I should change my birthdate to 1995 and see what junk they try to sell me.

Well, there is one ad for jewelry that looks legit, right?  The Bradford exchange!  How bad can that be?  Well, Google "Bradford exchange sucks" and see for yourself.

I think as a general rule-of-thumb you should just avoid doing business with anyone who advertises on Facebook.  If you are willing to put your company's name right up there with "one trick of the tiny belly" and "President Obama Lowers Your Car Insurance" - or whatever - than you can't be all that legit yourself.

And yet, we are told, time and time again that this company - Facebook - will have a market capitalization equal to about half that of Microsoft.  Microsoft has a P/E of 9.45.  Facebook, if they do the IPO would have a P/E of over 125.

Sure, that makes sense!

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