Barron's has been skeptical about Facebook (see Feature, "Mad About Facebook!," May 12) because of the company's high absolute valuation, relative to earnings and revenues, and challenges to its evolving business model from the greater use of mobile devices by Facebook users. Facebook hasn't found a way to generate meaningful ad revenue from mobile users.
The problem for Facebook is that it amounted to a giant concept stock with a $100-billion-plus valuation. Bulls said CEO Mark Zuckerberg was a genius and would find ways to monetize Facebook users.
However, without valuation support from ample earnings, it's tough to say where Facebook will settle.
~ Andrew Bary, "Facebook Loses Face - And How," Barron's, May 21, 2012
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