I didn't mean to come out as an armchair expert, just a believer in common sense. I reached my opinion by bundling the stock drop with: 1) Facebook's "ad click bots" story (I had a similar problem when I advertised on FB years back and have been hearing on and off about Facebook ad problems a lot over the years. 2) The revelation that at minimum 10% of FB accounts are fake (still not a bad percentage assuming it isn't secretly higher). 3) Revenue being based mainly on advertising (whose 0.1% click-through rate is going down each and every year). 4) FB getting closer to reaching its maximum realistically possible users. 5) A serious lack of innovation, drive, diversifying or anything at all going on at Facebook. 6) Near zero horizontal growth with no sign of vertical growth either.

At the moment it's just a sitting duck. I mean, my God what have they really done all these years? When a company branches out too far we call it a "Microsoft", when it has all branches and no trunk we call it a "Yahoo", and when it has only a trunk without branches it's now a "Facebook". The fact that they released "time-line" and "ask questions" shows how few options they have at growing or expanding (or how few they've tried). One trick, one pony indeed. They might go the way of Google and start expanding and experimenting after their IPO but from what we've seen. I'm not so sure at all.

I think the greater concern for Facebook is that they have tried to expand their reach on several occasions in ways that would seem to favour them commercially, usually at the expense of people's privacy and/or making the user experience worse, but they have discovered that beyond a certain level of tolerance they will get enough pushback from their users to cancel the plans and they still have to eat the negative PR for a while. By your analogy, they want the trunk to keep growing, but the roots can't go any deeper to support it.

You didn't need to be an expert for this one. You could have seen the inevitable dive coming with nothing but the most basic understanding of stock markets and concrete measures like the expected price/earnings ratio, without even referring to anything specific about how Facebook operates.

And if you did consider anything deeper than that, applying the slightest common sense to where Facebook's growth has come from so far and the current global population for example, or looking at Facebook's dubious record with regard to building a sustainable, efficient advertising system to monetize their users, or keeping those users on-side with sensitive issues like privacy or just the everyday user experience, every single one of these indicators would have been a red flag.

Did you ever think that maybe those investors aren't looking for a short term return and don't care about the stock price day to day. You know the type of investors we actually need more of.

I imagine most people who bought Facebook were banking on an irrational market-driven rise in the early days followed by a quick cash-out. You know, exactly the type of investors we actually need fewer of. Anyone who made the slightest attempt to consider the fundamentals from either an economic or a business standpoint was on a different continent on IPO day.

And if you actually were a little more creative you would see that Facebook doesn't have to bundle everything into the website. It can have separate brands like Instagram and grow into new markets that way. And with its sheer user base and content it would be able to decimate smaller competitors.

Except that in something like eight years so far, they have no demonstrated record of successfully doing those things, so banking on hypothetical future values based on what they might do (assuming any of a dozen major tech firms don't each their lunch first) is exactly the kind of foolish speculation that drives a $38 starting point.

That kind of intelligent investor was probably unlikely to buy in on a clearly overhyped IPO, in fairness.

But obviously you wont find a person in his her sound mind (not to mention financial guy) who would say: hey lets buy now and even if it goes down 40% thats fine we are in it long run... (lol)

Besides Facebook is a special example. It was banksters fraud perfectly executed. Yes Facebook makes money. Yes, it is self sustainable, yes it will pay off all its debts and creditors. Yes it doesnt go anywhere. But the overbloated IPO price with this PE was a freudster move. This stock belongs to single digit wagon. When it gets there, then consider buying for a $1 or $2 pop accordingly to good Q, but until we get there respect your money for God sake!

Do you really think facebook is there to stay? What is its life expectancy, 10 years?

All the successful "social" stuff captures and defines how we're using technology now, but that changes very quickly.