Case5 Value of Social Media

The Value of Social Media Giants

The case that was presented, is telling us Facebook has a market capitalization of over $160 billion. In 2013, Facebook generated just $1.5 billion in net income on $7.8 billion in revenue. There does not have to be a substantial revenue to create value for its investors. In early 2014, Facebook acquired the mobile messaging platform WhatsApp for $19 million. Then there is Twitter, which is garnering a valuation of $25 billion, despite never having turned a profit. All of these companies have a valuation in the millions or billions.
After reading the case study for chapter five. We think the huge valuations for these companies are justified. Who wouldn’t justify a huge valuation for Facebook? We’re not sure how many users Facebook had when they acquired WhatsApp, but we do know the amount of users for Facebook passes 1.23 billion monthly active users. Now, combine 1.23 billion users with the 500 million users they acquired from WhatsApp. Now you’ll never know when their flop is coming or when they’ll be out of steam. We think any companies like Facebook, with that many users, will draw thousands of investors. We or I do not think Facebook will be replaced by a successor anytime soon. Yes, maybe one day, but not anytime soon. As for now, the only competition that could possibly replace Facebook is Twitter. Twitter’s platform is set up differently than Facebook’s though. Twitter is more music driven and promotion driven. Yes, a person can do about the same things on each, but Twitter and Facebook platforms have a user friendly specific set up. What we mean by that is, Twitter’s website is user friendly towards following others, as in friends and family, don’t forget superstars. Superstars, friends, and family are on Facebook also but the Facebook platform is more user friendly as to sharing photos and having conversations. On Facebook, there are options to have photo albums, video albums, and much more. Facebook’s platform is very easy to share on and notify the public of any ongoing events. Overall twitter is a more complex version of Facebook.
We think the key factor that will give the mobile messaging platform, WhatsApp, success is going to be some sort of marketing. The case says there are over 500 million user using WhatsApp but it is not known to everyone. Since Facebook purchased the mobile messaging platform, it should find a way to market it on Facebook. Facebook has a much larger user base and would have a captive audience in the billions to market its new platform to, but yet, as a Facebook user, I have never seen it or heard of it. We don’t feel that even the fee of one dollar a year would keep people for using the platform if they knew it existed.
Pinterest is on the rise, more and more people talk about it. Pinterest gives its users the option of sharing items on Facebook and Twitter, which allows them to market to everyone on those platforms. As the case suggests, Pinterest is constantly informed about what its users are interested in, which definitely gives them an advantage.
The only social media service that has the potential to be the candidate to overcome Facebook would either be Instagram or Twitter. Personally, I think Instagram has a better chance to take over the limelight, when Facebook loses its steam. I, Jennifer, cannot say that I agree 100 percent with Martin’s view that Instagram or Twitter will take over when Facebook has run its duration. I feel there isn’t anything comparable to Facebook right now, on the market and that is why it is so popular. I think there will be something created in the future that may take the lead over Facebook.