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Why Investing in Facebook is a Mistake

Updated on May 15, 2012
Facebook Logo
Facebook Logo

With Facebook holding its Initial Public Offering for stocks, people started to get really excited. Have a piece of something that couldn't possibly fail?! OF COURSE! Not so fast though, there are a lot of things to consider here so don't let your opinions of how much you like the site get in the way.

Advertising Companies Pulling Funding - Doesn't Work

Today, the 15th, we found out that GM (who has invested 10 million in Facebook) is pulling their advertisements and funding because they don't work. Wait a minute, they don't work? Of course they don't - as any user of Facebook knows. Do YOU ever click on ads? Do you ever magically want to buy anything because of Facebook? The advertising agencies will start to realize that advertising on Facebook doesn't really help them, like GM has now, and start to pull their money and the stock will drop drastically.

Facebook has a few problems in the advertising sector. Firstly, limited space. There is only so much air that can be filled before it starts to cover content users want. Secondly, patience. Facebook users have been unhappy about advertisements and other things before - and they keep complaining. If Facebook crosses the line and adds too many advertisements, Facebook might go the way of Myspace...

Social Networks Fail

Myspace. The company was sold by News Corp after it failed and they got only 35m, 535 million less than they bought it for. Yahoo!buzz. Friendster. Ping. ConnectU. There is a plethora of other social sites that failed horribly. The cycle will continue sooner or later - especially if they push advertisements on people. Someone will create something new, something that does everything Facebook does and more, and it will be advertisement free. Perhaps Skype will do it and add video and voice to a social media network? Who knows.

Public Image

For a longer overview of why Facebook has Public Relations issues, see this article.

There are numerous reasons Facebook has PR issues. They go against the communities wishes with things such as Facebook Timeline, advertisements, and more. The main problem is the CEO though. He shows open contempt for people. He offends people constantly. Business people are not happy working with him, he does things without talking about them to his board and makes wild investments worth millions to billions - not exactly a safe person to work with. Also, he thinks people are "dumb f**ks" for giving him all the information they have through Facebook. Classy person.

The Inevitable Loss

Looking at these three things alone we can see Facebook is not a sound investment. They are already loosing business and they haven't even sold stock yet. This advertising company with a social media front has its days numbered once people realize their advertisements don't work, Facebook users realize that there is something better, Facebook users get tired of advertisement spam, or Zuckerberg snaps and tells people what he really feels about them or does something else to offend a large number of people - either Facebook users of Business Investors.

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