Is Facebook Inc (FB) Losing Its Cool?

Quickly, how Exchange works is that would-be advertisers bid in real time to place “cookies” on Facebook. Based on what a Facebook user just browsed off Facebook when the user comes back to Facebook, voila! there is the targeted ad. Exchange protects Facebook’s own valuable customer data, but allows advertisers the chance to narrowly target users based on their actual interest in real time rather than past history of likes.

Walking A Tightrope

But here’s the thing, if ads gets too intrusive, the kids will flee. CEO Mark Zuckerberg has pounded the table about this since the very beginning.

Facebook has to walk a very fine line between shareholders’s desire to wring every drop of monetization from the site and users’s desire to just use it. This has been the crux of the debate on Facebook since its IPO. Rumors of an impending purchase of Microsoft’s Atlas Solutions by Facebook may be the pole Facebook needs to holds as it balances on that tightrope and with their Google search challenging Graph Search giving them a net as it were.

One other thing I mentioned before is the trend of potential employers and admission officers to check out applicants’ Facebook pages. This issue has come up before the courts and is a little mentioned risk to the stock. People expect their Linkedin Corporation (NYSE:LNKD) pages to be inspected but their Facebook page…not so much. If more and more young people feel they have to censor their pages… again they will flee. This trend is something Facebook has little control over.

Facebook is trading at an 1822.00 P/E while LinkedIn is at an 815.95 P/E. LinkedIn has been outperforming Facebook and has no need to stay cool. It’s not personal, it’s business. As for Google, the cool factor is in their past. Even if their Google exchange is outperformed by Facebook they have Android, search, etc. It wouldn’t be the first time they withdrew an ad initiative. Google is trading at a 24.23 P/E and hit an all time  high intraday on February 12.

Stay Cool, My Friend

Facebook celebrated a billion users in October. Their mission statement, as uttered by Zuckerberg remains the same, “Our mission is to make the world more open and connected. We do this by giving people the power to share whatever they want and be connected to whoever they want, no matter where they are.”

If my daughter ever friends me on Facebook, I’ll let you know because that will be my sell signal. Until then picking up a little Facebook before they blow their cool could work for a while.

The article Is Facebook Losing Its Cool? originally appeared on Fool.com and is written by AnnaLisa Kraft.

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