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Facebook continues decline as entire sector falls

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The superstars of Facebook are still extremely wealthy people, but the shine that existed before their IPO now is no longer there. The sector has been hammered on Wall Street with other big names such as Groupon and Zynga and even LinkedIn also falling recently. Personally I've always been suspicious of the sector, viewing it as overhyped and seriously overvalued.

After reading reports about Facebook generating less than $6 per user, per year, the company would have to either continue to rapidly add new users (something that is not happening) or start getting "creative" with data and deals. "Getting creative" is nothing new for the tech industry and with the young management team there, that option sounded more and more likely.

I used Facebook for a brief period of time but closed my account years ago and never looked back. I tired of their squirly behavior including who owns photos and information. Having worked in the tech industry for over twenty years, I have a bad feeling about the actions that may come in response to desperate attempts to pump up the numbers. Pressure to deliver quarterly numbers make otherwise rational people do irrational things.

It's doubtful this type of online interaction will go away but it's simply not the earth shattering movement that people believed. Most of these currently public companies will not go away but their values will have to come back down to earth. They're all interesting, but not life changing.

As their values decline, expect a lot more consolidation across the board in this sector and fewer millionaires and billionaires being created after 24 months. Coming back to reality is not such a bad thing for anyone.

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