Comment Big problem for Facebook (Score 1) 307
Apple, Microsoft and Google don't need to grow to survive. They can continue to operate profitably at their present size. AAPL has a P/E ratio of 10. MSFT, 18. GOOG, 26. Those are all reasonable price/earnings ratios for successful mature companies. F (Ford Motor) is at 10, and IBM is at 13. Both are century-old companies, still doing well.
Now look at Facebook, P/E of 514. And that's after the stock declined 37% since "the world's most hyped IPO." Facebook just doesn't generate much profits. Facebook's traffic and revenue peaked in 2012. In revenue terms, Facebook was never that big. It's in the class with Adobe, not the big boys like Microsoft, Google, and Apple. If Facebook didn't have a two-tier stock structure that gives most of the votes to Zuckerberg, he would have been fired by now.
That's Facebook, the biggest success in "social". Everybody else is doing worse. Zynga just had a big layoff. Social looks like the first dot-com boom and crash - the players were talking about "clicks now, worry about the revenue later". Well, "later" is here.
The fundamental problem with "social" is that the revenue model is to crank up the ad density, which annoys the users. In the last year, Facebook introduced "sponsored stories" and Twitter introduced "sponsored tweets". Myspace tried that strategy. It didn't end well.