I get tons of mail from public relations companies. I call it quasi-spam. The PR companies are looking for me to write about their clients. Why wouldn't they send out such emails? Like spam, there is no cost and the potential, however small, that they'll get some benefit. Send out enough mails and you'll probably snare 5 bloggers. It's a numbers' game. Of all the mail I receive, 99% of it goes in the virtual trash within 10 seconds of me opening it.
Today, I'll cover one that didn't.
I got an email about Kapitall asking me to look at their Facebook video infographic. I thought that infographics are fairly cutting edge, but this is the first I've seen of a video infographic (3-D infographics and hologram infographics can't be far behind). Curiosity got the best of me, so I watched it:
Before I get to the point that I wanted to make about this video, can we all just have a little laugh at the irrelevancy of one fact in the video? The fact that I'm talking about is that Facebook's users spend enough time on the website each day (combined) to walk to the Sun and back twice. That's a mind-blowing odd thing to claim, but to make it even more crazy, the video shows people taking an escalator to the Sun and back. Clearly that's not an accurate description of walking and how could I have not heard about these Sun escalators before now?
Okay enough of my attempted humor. If I was funny, I might have a career in it and people would probably me for it. They don't.
Let's fast-forward to the 1:50 mark in the video. It shows that Facebook is likely to be priced at $40-50 for a valuation of $100-110 billion dollars. The video then goes to show a few things that you can buy with $50, like 6 movie tickets, 5 packs of cigarettes, or a video game. Then we get to the 2:07 mark where the video makes the case that if you invested $50 in several companies when they went public you'd have a lot more money.
One example is Microsoft. If you invested $50 in Microsoft in 1986, you'd have $18,000 today. The implication is that this is likely to happen with Facebook - especially after they showed you all these amazing Facebook stats. However, the reality is that Microsoft went public as a small company in 1986. Windows had just been released a few months before. Your investment in Microsoft could grow 360 times because you were buying a bigger piece of a company that had a lot more growth in it. (Hindsight is a beautiful thing.)
For Facebook to take your $50 investment and make it worth $18,000 it would have to be worth 36 Trillion dollars. To put that in perspective, the United States' Gross Domestic Product (market value for all goods and services sold) this year is $14.59 Trillion (according to World Bank). Facebook isn't in the same class as other companies like Apple and Google when it come to value today.
The next slide after the Microsoft one is that Facebook is just getting started. That may be, but as the rest of the video showed, Facebook has already had much of its growth spurt. That's already factored into the IPO price with the 100 billion valuation.
There are two lessons to be learned here:
- Don't buy into the marketing hype with the Facebook IPO - Can you make money by buying Facebook stock? I think there's a chance you could. However, keep in mind that Amazon's value is a little less and Ebay is half of what Facebook is expected to be. I think the chance is the same with these companies as with Facebook.
- Be critical of sneaky advertising - Kapitall's business is to get people to sign up and place investment trades through them. After watching this video the temptation is to go sign up and put your $50 to work to making you thousands. I'm clearly not against investing, but this advertising is very misleading. It makes me not want to trust Kapitall and further calls into question their claim on their homepage: "We do the heavy lifting. You get fresh market insights delivered daily, and intuitive tools to help you find and choose your stock picks. All for free." If these are the insights that they are offering for free, thanks but no thanks. I'll take my business to another company.
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