May 25, 2012 — by: E. Werner Reschke
Categories: News, Predictions, Products

The Facebook FlopWhat happened? What the [explicative] happened?!? Facebook was this decade's version of Microsoft, Apple and Google. Facebook was going to make everyone who invested in its stock a billionaire. It was the goose that only laid golden eggs. And now Facebook stock is dreaming of a day where its stock price is equal to or greater than its IPO launch price.

The problem that happened is reality. Someone once defined reality as something you really understand when you run into it. Reality is the real world and it can be devastating if you don't understand it before you run into it. Facebook's biggest problem is it has never had to be a business. Facebook is an idea with a lot of FREE users. But there has never been a strong business model around that idea. Facebook's funding (until now) has mostly been private investors who banked on a day when an IPO would happen and their investment returned a handsome reward. Again the problem with that dream was reality. In this case reality is the market, which takes profitability very seriously, and doesn't see profits like the investors did.

Sure Facebook has great potential to make a large sum of money. However to do so Facebook is going to have to start acting like a business and not something run out of a college dorm room. The endless supply of money from investors who buy the dream are over. Now Facebook lives in the real world, where revenues must to exceed expenses.

Can Facebook turn their stock price around? Can they do the things they need to do to become profitable — and exceedingly so? Sure. It is really a matter of whether they want to or not. Opportunity has been knocking on Facebook's door for a long time, the question is whether Facebook has the courage to open it.

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