3 Reasons Facebook Is Not Google



By Alex Dumortier, CFA | More Articles
May 20, 2012 | Comments (10)

Superficially, there are some similarities between Facebook (Nasdaq: FB ) and Google (Nasdaq: GOOG ) . There's no doubt that last Friday's extravaganza was the most highly anticipated IPO since the search company sold shares to the public in August 2004. Perhaps investors now buying Facebook shares expect to reap the same returns that early investors in Google did. If they do, they're using the wrong blueprint -- there are fundamental differences between the two companies (and the two stocks) that mean Facebook investors will never achieve comparable success. Here are just three of those reasons.

Facebook's growth is appreciably slower than Google's was
The following bar chart shows the annual revenues of Facebook (red) and Google (blue) side by side. I've chosen different start years -- 2000 for Google and 2007 for Facebook -- to match them up at comparable periods in their development. The vertical axis is on a logarithmic scale, and the unit is billions of dollars.



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