The value of a company in a fair market is a function of the confidence of investors that someone in the future will pay more for the same stock.
For a highly profitable company like Facebook, this isn't a foolish confidence in anyway. Even if you don't like Facebook it would be a very radical position to take to think that their profits next quarter will be remarkably lower than this quarter.
In greater fool theory, you know there is no reason the investment is going to increase in value. You are just hoping someone else is going to buy from you and accept that risk too.
When you are counting on the 'confidence' of future investors to (over)pay more than you did for something, rather than any rational valuation, you are quite literally counting on a greater fool[1] being willing to buy it from you.
[1] https://en.wikipedia.org/wiki/Greater_fool_theory - note that it isn't always about an asset having no value, just that for an overpriced asset that there will be someone else willing to pay more for it.
But that's a difficult argument to make for Facebook. Facebook is highly profitable - they have averaged something like 80% gross profit margins for a decade[1] while sustaining significant revenue growth. That's pretty much guaranteed that their stock will continue to appreciate - with margins that high they have a lot of room to play with things to keep growth going.
What metric makes it look like that is a greater fool situation?
The thing that sets me off about these threads is the (I believe sincere) thinking that 'well if that's the share price, it must be worth that much'. That's fine if you're speculating/trading but is absolutely wrong if you think what you're doing is investing.
Are we reading different posts? The post you responded to repeatedly made the point that profits are one of the key builders of market confidence:
>> Firstly, say 5 years down the line, the holders have confidence that FB will still be making money, be profitable and be on the market.
...
>> They too must have confidence on FB that a further 5 years or more down the line, FB will be profitable and will be in the market and keep earning money.
...
>> So is FB really worth 900B, yes, if the holders keep holding it and FB keeps earning profits.
It's a key point of their argument!
