William Bernstein said "There are two kinds of investors, be they large or small: those who don't know where the market is headed, and those who don't know that they don't know." When Facebook entered its Initial Public Offering (IPO) earlier this year, it became THE stock to have. So everyone bought it.
The buzz was that it would be "the next Google" and that it would "skyrocket" and it would eventually become "like owning IBM in the 1980s." This, of course, was coming from those interested in selling or brokering sales of FB stock and the gurus who usually surround the latest market buzz.
For those serious about their investments, though, buying Facebook was a no-brainer - if you bought it, you clearly had no brain. Anyone who wanted to get in on the ground floor of FB ownership should have read the social network giant's IPO prospectus. Had they done their due diligence and read that, they would have immediately saw the buying into Facebook was a fad purchase and nothing more.
Facebook's legal team, financial team, and CEO Mark Zuckerberg spelled out right in that prospectus why investing in FB was a generally bad idea if your plan was to make money with it rather than just impress your friends at parties by mentioning, offhand, that you owned Facebook stock.
=== Warnings Listed Clearly in IPO filings
The warnings that the social network was not exactly a sound investment were loud and clear in the IPO prospectus filings. They clearly state that the growth rate of the social giant was shrinking rapidly, that its user base was moving to mobile and that mobile is far less profitable for FB, and that Zuckerberg held an iron fist of control over the company's ownership control.
All of these, among many others, were clear signals that Facebook is not a profitable enterprise. In the sense that it doesn't make money hand over fist, just hand over hand. This meant that initial stock buyers' expectations (given the flying price of stock in the first few days) were "hand-over-fist" instead of "small and staying there." Oops.
Further, the control that Zuckerberg holds on the company means his position as CEO and of having total say in the helmsmanship of Facebook means he alone decides where the company is going and how it's going to get there. Investors have no say since they can't muster the votes to force his dethroning and put someone they prefer in his place. This is good news for Mark, bad news for investors hoping to make huge profits.
Zuckerberg has made it clear that making a lot of money is not really his goal with FB. He's more interested in the social aspects of the network and what it can accomplish. Much like Google, Facebook is a business only so far as that funds the development of other things, not the other way around. Unlike Google, Facebook was trading at more than fifty times its annual projected earnings, which is about quadruple what most other tech companies do.
=== Facebook is not an investment for profit
Those who invested in FB before its IPO reaped huge rewards. Those who invested after its IPO did so for the social boost or to support a company whose product they enjoy. Anyone who invested in public shares of Facebook in order to profit financially.. they'll have a very long wait for a payoff. Those who complain about this obviously didn't do their homework before buying.