Local Economists See Dollar Signs in Facebook’s Future
Orlando Institute for Economic Competitiveness Director Sean Snaith believes that Facebook’s “name recognition alone will help sell the stock.” Facebook is estimated to be worth at least $75 billion.
Snaith said, “Facebook’s greatest asset is the sheer volume of eyeballs that look at the site. With so many users the potential advertising revenue is substantial and will most likely lead to a successful initial public offering.”
However, Snaith does not know if compensating users for their personal information is feasible because it is unclear if the content itself is “saleable”.
Snaith said, “Giving me a nickel for each picture of my new puppy I post on my Facebook or each “like” I click will not translate into more revenue for the company. But allowing me to build a Facebook store through which I can sell goods or services and leverage my social network could generate a commission stream for the company.”
Facebook is profitable because it sells ad space to companies that wish to showcase their products to 845 million users. Every web user is forced to view advertising as part of their web viewing experience including the use of free email, search engines, instant messaging, forums and other popular sites. However, critics said consumers would never pay for cable TV and satellite radio and both have become a viable business.
Ticonderoga Securities equity research associate Brennan Merrell said, “I believe a limited amount of Facebook users would pay to have their personal information private from Facebook advertisers because they are already inundated with web advertising.” Merrell thinks that there another potentially profitable solution.
Merrell proposes, “Facebook could benefit from paying users who draw millions of monthly users to their personal Facebook pages.”
Merrell bases his opinion on the probable success of Facebook on the actual success of Google and YouTube. “Currently, Google’s YouTube shares advertising revenue generated from viral and highly viewed channel. YouTube’s success can be attributed to the financial incentive of viral videos and popular YouTube channels,” said Merrell.
“Potentially, Facebook could give users an incentive to create more high quality content and users would log more time on Facebook, which in turn would generate more revenue for Facebook,” said Merrell.
Economic Roundtable of Jacksonville board member, Bob Kemper agrees that Facebook could make loads of money if it is allowed to sell shares of stock to the public. Kemper said, “If Facebook is able to offer its stock on a public exchange, then I believe that it surely has the potential to rise in value.”
Nevertheless, Kemper said, ”If you were a current pre-IPO Facebook equity-holder, then recent history would suggest that it’s exceptionally unlikely that you would come out financially disappointed in the short or mid-term. As a post-IPO investor, the risks are much greater.”
Flagler College student and Facebook user Bethany Johnson worries that Facebook could just be the next big fad like Apple and Starbucks; profitable until the next big fad replaces it.
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