Not Many New Friends Are ‘Liking’ Facebook

If something sounds too good to be true, then it normally is, which segues nicely to the sale of shares in social networking site Facebook exactly a week ago.

The internet is a mystery to many of us but if there is one thing that has been proved since its inception, it’s that a fool is easily parted from his/her money.

Last Friday the financial press was lauding the public sale of shares in Facebook and the extraordinary valuation of a company that, in reality, had demonstrated very little in material assets. Financiers had been too easily impressed by the staggering number of users worldwide and the way it crossed borders. No thought seems to have been given to what use could be made of those users, other than they were prime targets for advertising, which could ultimately raise revenue and theoretically at least, huge profits.

But, Facebook had already been milking this ‘cash cow’ and the scope for expansion is purely speculative as computer users are notoriously fickle in the way they use the internet. Once the novelty of collecting several hundreds (or thousands) of unrealistic new ‘friends’ and uploading pictures of themselves posing in ways they would not normally be seen posing, wears off, they will very likely move on to the next big internet ‘thing’.

In the space of a week, the value of Facebook shares has fallen more than fifteen percent with many investors losing millions.

However, Mark Zuckerberg, the social network’s founder, and his close circle of friends, have walked away with gazillions of dollars, largely because of the naivety of their new investors. It has also been reported he personally sold £720m worth of his own shareholding, on the very day the company went to market, and thereby saved himself a ‘loss’ of £111m by getting out early. Did he always sense the company was overvalued?

Somewhat predictably, those investors who have watched their money pixelate into thin air, are now in the mood to sue for false promises they claim were made before last Friday. In truth, however, they were just stupid.

Just like Facebook’s users, who believe that showing hundreds of friends on their profile is a status symbol, the investors believed having shares in such a ‘trendy’ site would make them financially ‘cool’. It seems now the reality has started to bite.

Mr Zuckerberg is likely to find himself deleted from the ‘friends’ lists of many of those investors.