June 17th, 2011
11:51 AM GMT
(CNN) – We in the media are mad about Facebook. Why do we write about it so much? It's a no-brainer: over 600 million members, and lots of them Facebook for hours every day. Want to report on something that will interest people? This seems to fit the bill.
Look at some of the things the media has said about it this week:
Facebook could be worth $100 billion when it goes public – that's according to CNBC (it later wheeled out an analyst to say, in effect "Yeah right," but still).
Facebook use has peaked in many of the countries where most of its users live – according to umpteen media outlets.
Hold on, what's that? Facebook has peaked? Well yes – the number of users in the U.S, Britain and elsewhere is going down, a research company says. But wait – it's worth $100 billion – and its popularity is falling? How can both of these be true? As most professional investors will tell you, the only reason to buy shares in a company with such an astronomical valuation, would be that you're convinced its profits will grow fast. Very, very fast in fact.
So which is it? Is Facebook set to go on pumping up in the style of Dr Bruce Banner turning into the Incredible Hulk? Or are we already getting tired of Mark Zuckerberg's brainchild?
I think I know the answer – and it stems from my own habits. I've come to realise they are an indicator to many kinds of trends – a negative indicator, that is. For I am a recent convert to Facebook. The global phenomenon that long ago counted just about everybody as a user – I joined it this year. Nobody ever accused me of being an early adopter. So why is this a sign of impending decline for Facebook? It's just me – where trends are concerned, I'm bad news. You really wouldn't want me on the team. It's happened before – I latch on to something, and somewhere in the distance is heard the death-rattle of whatever once was cool.
It's not just tech trends. In my teens, it was music. Too young to appreciate the early stirrings of the punk rock explosion, I caught up with the second wave of do-it-yourself bands too late: two years after the fury of the Sex Pistols, I was raving about the Buzzcocks, Stiff Little Fingers and the Undertones. Already, in the music press, letter-writers to the New Musical Express were claiming "Punk's not dead" – they were wrong, it was.
Later in life I started missing the boat with techie things. You remember the first dot.com bubble? I chose a crucial point to pitch my money in: the flotation of travel website Lastminute.com. "Flotation" is an interesting word here – subscribing for shares was the financial equivalent of showing up at the dock begging for a ticket just as they were about to pull up the gangplank on the Titanic. Lastminute went public at 380p a share in March 2000. Within six month, the shares were at 75 pence, a victim of the bursting of the bubble (and the fact that it never made any money).
At about the same time, I was involved – though I wouldn't claim a pivotal role – in a piece of mistiming of epic proportions. I'd been employed by CNN for mere weeks, when parent company Time Warner agreed to merge with AOL – the hottest name in internet back at the back end of the 1990s. At well over $100 billion, it remains one of the biggest corporate deals ever, and everyone said it was worth every penny, because charging customers for an internet browser was clearly going to be huge in the 21st century. It didn't work out that way of course (my current bosses won't mind me saying so – they're not the guys who got the company into it!) Share-price wise, it was an underwhelming time for Time Warner investors for the next, ooh, ten years or so.
So what does that tell us about Facebook? Probably, that if I'm on board, decline, shame and financial turmoil aren't far behind. You wouldn't call it scientific – but if economists and stockpickers only followed empirical evidence, why have we heard of the Skyscraper Index and the Hemline Theory? So, sorry Mr Zuckerberg – but all the same, good luck on selling up a wodge of stock at a $100 billion valuation! As a consolation, here are a couple of other tips for free, based on my evolving relationship with the world of technology: I recently started Skyping (yes, Steve Ballmer, I probably should have emailed you before that $8.5 billion you paid for it last month) .. and I'm thinking of getting an iPad2. Does anyone have a number for Steve Jobs?
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