Ten Reasons NOT To Invest In Facebook

If you’re a Robert Scoble follower, you know he believes Facebook will be worth a half-trillion dollars by 2015. But not everyone’s as confident as Scoble that the social network will be worth the investment when it goes public.

Financial Advisor, Rob Black, Wealth Preservation & Retirement Planning, points to a couple of red flags:

1. A slowdown in monthly/daily active users

2011 MAUs 845 million +39%
2010 MAUs +69%

2011 DAUs 483 million +48%
2010 DAUrs +77%

2. Facebook is having to pay an increasing amount of money to acquire new users. He points to this data:

2011 Profit of $1.76 billion +71% yr/yr
2011 Marketing and Sales +132% yr/yr
2011 Costs & Expenses +107% exceeds its revenue growth rate.

Black says, “This is in contrast to 2010, when its sales & marketing expense was up 60% but revenue was up 153%.”

Other concerns, both serious and not, which I’ve collected in a crowdsourcing effort from friends/followers on Facebook, Twitter and LinkedIn:

3.  Matthew Crowe, Founder/CEO, Ahhha.com: It’s time is short-lived. It provides no “real” value and while Zuck claims to bring people “together” on FB, it in fact is making people less and less connected in actuality.

4. Shelly B.: People are growing tired of Facebook. I think their user numbers don’t accurately reflect today’s active users. I see Twitter becoming more popular.

5. Kjetil Faye Lund, Business Analyst: Dropping popularity could be around the corner, advertiser will always move to channels where the action is.

6. Shaun Saunders, CEO, GraffitiPR: It makes you unproductive, fries your brain, ruins relationships, makes you say and do things in an open source environment that you wouldn’t normally say or do. What good are you to Procter & Gamble if any of above things are an issue?

7. Jason Blackburn: It’s more overpriced than LinkedIn’s IPO…Oh and I am waiting for MySpace to rehire TOM and make a comeback…

8. Carmen Hughes, Principal, Ignite Public Relations: They should have done an auction IPO. That move would have been very well received especially considering how unpopular investment banks are, given the near market collapse they helped instigate.

9. Rocco Chappie, Founder/CEO, CharityFire: A valuation at 100b has at least 2 years of growth priced into it (25x sales). Unlike Apple, I don’t think that Zuck has an iMac/iPhone/iPad up his sleeve. Netscape->Yahoo->AOL->Facebook.

10. Kym: Zynga makes up 12% of its revenue. What happens if Zynga succeeds in its efforts to break its dependency on Facebook for its users?

What are your biggest concerns about Facebook and its IPO? Let’s weigh the benefits and drawbacks in the comment section below. I want to hear your thoughts.