Unlike many Internet companies that exploded during the dot-com bubble, then quickly fizzled out without ever showing any semblance of value, some internet stocks in this sector today aren’t in nearly as much danger of living shortened lives.
But some of the flashy Internet stock companies still make me wonder.
For example, Facebook (FB) rose 140% over the past 52 weeks and is now supposedly worth more than $140 billion. If you place any merit on Princeton University and its recently released study, the online social butterfly is in the early stages of abandonment by users and stands to lose 80% of them by 2017. Facebook’s revenue growth of 60% in 2013 came as a result of mobile users, but without another segment to tap, that percentage will likely decrease as the years go by.
I’ve seen estimates for the fair value of Facebook stock as low as $12, a far cry from the current $57.
Here’s another : The quarter before Twitter’s (TWTR) IPO in November 2013, the social networking site lost $64.6 million, had a long history of not making a profit, yet was valued at $24 billion on Day One and $35 billion today … or 31 times projected sales. It’s not expected to make one cent in profit until 2015 at the earliest. Ah, but instead of losing 18 cents a share like it did in 2013, it is only projected to lose 4 cents a share this year.
I wouldn’t be putting my money in either Facebook or Twitter this year. But here are three other big Internet companies who know how to redefine themselves in the face of fading fads, provide multiple and varied services, have a foothold (or at least a couple fingers) in China and turn profits: