I finally stumbled across a mainstream journalist who refuses to buy into the hype around Facebook and call it like everyone who isn’t a techie blogger sees it. Facebook doesn’t make all that much money now (profit-wise) and its only hope for the future is to cash in while everyone seems ignorant of the fact that users are not the same thing as dollars.
Facebook’s valuation climbs with every investment, if and only if, you subscribe to the theory that the value of a company is what the last buyer paid for it. That doesn’t mean that it has figured out how to turn users into profits. And, it most certainly doensn’t mean that it has insulated itself from being the next AOL.
The only question is, will Facebook cash out before everyone sees the smoke and mirrors or will is sink slowly taking all of that temporary wealth with them? It looks as though Goldman Sachs’ clients will get a front row seat to that contest.