Video: How Facebook can avoid failure


The following video is part of our “Motley Fool Conversations” series, in which industrials editor/analyst Isaac Pino discusses topics across the investing world.

A lot of the focus on the Facebook IPO has centred around the first-day pop, or lack thereof, but long-term investors should be much more focused on the fundamentals of the business. Can a social network make money over the long haul? In the past we’ve seen MySpace fail miserably as users became uncomfortable with salacious advertising and the constant experimentation that actually stunted its evolution. If Facebook is to serve as the modern-day town square, do we want it to resemble New York’s Times Square? Investors should consider the various paths Facebook can take. If MySpace became New York’s Times Square, where passersby gawk at the advertising but are reluctant to linger, can Facebook avoid this fate and find other avenues for revenue growth? Isaac offers up his suggestions to bolster the bottom line in the video below.

Facebook recently became the largest company ever to IPO. Yet all the buzz around this social media monster could prove off base, as Facebook has deep problems converting its millions of members to revenue.

 

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The Motley Fools purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

A version of this article, written by Isaac Pino, originally appeared on fool.com

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