Sorry, Facebook Inc (FB): Real Friends Aren’t Data

A lack of monetization
Of course, the end goal of Graph Search is to make more money through advertising to users. Google Inc (NASDAQ:GOOG) has a superior average revenue per user of $43 compared to Facebook’s $4.50. This is because when people are going to buy something, they research it with a Google search, and have a future intent of an action. Facebook, meanwhile, is full of past and current actions with pictures and status updates, but has yet to be able to market future intents to advertisers. To capture future intents, Facebook Inc (NASDAQ:FB) has come up with Graph Search.

It’s the right strategy for Facebook, but what’s troubling is that Facebook has only been working on Graph Search between one and two years. It’s still in a rough beta version, and Zuckerberg said it could be a business opportunity over time, which implies an even longer wait for the growth at which Facebook’s stock is currently priced. The amount of buzz Facebook Inc (NASDAQ:FB) attempted to create over this product makes it appear that they have little else to deliver to investors in the near term, which means the opportunity cost of holding the stock now may end up hurting investors. If it takes a year to release a beta version of a product that still doesn’t improve the bottom line, investors should hope there’s more going on behind the scenes.

The article Sorry, Facebook: Real Friends Aren’t Data originally appeared on Fool.com.

Fool contributor Dan Newman has no position in any stocks mentioned. The Motley Fool recommends Facebook and Google. The Motley Fool owns shares of Facebook and Google.

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