GM Pulls $10 Million Facebook Ad Buy, IPO Doubts Loom

Posted by · May 16, 2012 10:59 am

GM Pulls Ad Buy, Facebook IPO DoubtsIs the Facebook IPO in trouble? Well, there’s really no simple answer to that question. After General Motors announced that it was bailing on a $10 million ad purchase citing low impact on consumers, questions have begun circulating about the wisdom of investing in the social network. Despite GM’s insistence that its decision had nothing to do with the “riskiness of the overall Facebook business model,” the question of whether advertising on Facebook is any better than traditional media has undoubtedly made its way to the forefront of the minds of potential investors.

Of course, that’s to be expected when the nation’s third largest advertiser backs away from a deal with a company that makes its billions on, well, advertising.

And now, with the onus on Facebook to prove to other advertisers that it is still a worthy investment for their ad budgets, many are wondering if they should invest in a company that is yet to develop a proven means of long-term profitability. The answer: It depends.

Watch this quick, one-minute video from the folks at Business Insider to understand what I mean:

So, if you aren’t worried about the uncertainty of Facebook’s future solvency, not to mention the potential that this is all part of another heavily inflated tech bubble, maybe it’s worth the investment. Heck, you might even be one of the lucky thousand who become Facebook millionaires overnight.

But then again, maybe you won’t.

So what do you think? Is Facebook really worth its $100-billion-plus valuation? Is it a good investment? Share your take in the comments below.

For more news on the Facebook IPO situation…

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