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Facebook Stock Won’t be Saved by this “Useless” Idea

Thursday, October 4, 2012 23:04
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(Before It's News)

Facebook Inc. (Nasdaq: FB) announced today (Thursday) it had finally amassed its one billionth member.

While the company celebrated the landmark number, many analysts simply shrugged it off. So did Facebook stock, which was down about 0.4% by 2 p.m.

As MarketWatch pointed out, “it’s great to have one-seventh of the world’s population in your network, but Facebook will have to translate that to the bottom line to sustain its upward momentum of late.”

Or, as Money Morning wrote a few weeks back, “Congrats on one billion Facebook users… who buy nothing.”

Facebook, in order to change that flaw, released a new plan this week to make money off its enormous subscriber base.

But here’s why Zuckerberg and team should go back to the drawing board.

Facebook’s Big Bet on Narcissism
Facebook announced it’s testing a new feature that allows select U.S. members to pay a fee to improve the visibility of what they post on their FB pages.

The promoted-posts-for-users feature works by making sure that a comment or photo shared by a Facebook member gets noticed in their friends’ newsfeeds by placing it at the top of the news feed.

“Every day, news feed delivers your posts to your friends,” Facebook wrote in a statement on its official blog. “Sometimes a particular friend might not notice your post, especially if a lot of their friends have been posting recently and your story isn’t near the top of their feed. When you promote a post-whether it’s a wedding photo, a garage sale, or big news-you bump it higher in news feed so your friends and subscribers are more likely to notice it.”

A limited number of U.S. users with fewer than 5,000 friends and subscribers are among the first to test the new service. It has already rolled out in some 20 other countries.

A variety of pricing options are under consideration. The current test price in the United States is $7, a Facebook spokesperson told Reuters.

Technology news sources have been quick to weigh-in on the new feature. Most don’t like it, and criticize those who would.

WebProNews wrote that Facebook is “testing the self-absorption and inherent narcissism of its users by allowing them to pay to make sure their witty status and clever amateur photography reach maximum number of friends.”

Editors Note: This is just another reason Facebook stock is worth much less than Wall Street claims. Here’s where it should be trading

.

Meanwhile, in May PC Magazine called highlighted posts “a new tool for jerks.”

Facebook users seem to be sharing analysts’ strong “dislike” reaction.

“It would probably be useful for politicians, business owners, and narcissists, but useless for everyone else,” Facebook member Matthew Cole told CNN Money.

User Jonathan E. Seely added, “I can’t imagine why I would pay to promote my personal posts, most of which are about my cats or some pop punk band no one cares about.”

What Facebook users do care about is the site is free. That has been its biggest attraction. Changes to that could definitely hurt that newly attained one-billion user number.

No Help for Facebook Stock
The move underscores just how desperate the Menlo Park, CA-based company is to garner revenue as it looks beyond advertisers for income.

Concerns have plagued Facebook since going public about its growth, waning advertising sales and slow going mobile strategy. Its IPO was nothing short of a fiasco, and shares have experienced a steep decline since the company’s debut.

Currently weighing on the stock’s performance are the millions of shares set to flood the market amid the expiration of lockout periods which will allow early investors, employees and insiders who got shares very cheaply to dump shares on the open market.

Facebook stock got an initial boost from the news, but then slipped to under $22 Thursday, about 42% below its $38 IPO price.

Related Articles and News:

Tags: Facebook Inc Nasdaq: FB, Facebook IPO, facebook stock, Facebook stock price, FB Stock Price, Nasdaq: FB



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