To Have Facebook or Have Not?

“You know how to whistle, don't you? You just put your lips together and blow.”

With apologies to Lauren Bacall, the Facebook S-1 is out,  and here are the numbers you need to know:

$1.974 to $3.711. $.606 to $1.

The first set of numbers are Facebook's revenues, in 2010 and 2011, in billions of dollars. That's nearly an 90% growth rate. The second set of numbers are Facebook's earnings for the same period. Fast growth, and $1 billion in earnings is nothing to sneeze at. But growth there is slower.

While most reporters are treating this document the way TMZ might treat Lindsay Lohan coming out of a limo, the question is whether you should take a flyer on it.

There are three answers to that.

1. Do you Facebook? If you don't, then don't touch the IPO. Don't invest in anything you don't understand, or at least know something about. And Facebook is pretty easy to understand once you join it. I did. Didn't like it. They still count me, but I haven't been to my page in a year. I use it to make snarky comments on Web sites that take that credential, I link stories from Seeking Alpha to it, and that's about it. No Farmville cows for me, and I don't look at their ads.

2. Do the math. Facebook is talking about a $100 billion valuation. That's an Amazon-like PE of 100 on trailing year's earnings, 50 if you think they can double it again this year. But they can't, because the law of large numbers says it's harder to move the needle as the numbers get bigger. Right now the market is treating Google at a PE of 20, Apple at 15, Microsoft at 10. My guess is they'll value it at $70 billion and expect a big pop at the open – you always have to have a big pop at the open or what's the point of doing the IPO? What did you pay the underwriters all those millions for, if not for a pop at the open?

3. Look at the headwinds. Forget Google Plus. They can't even get into China. Besides, China already has its own Facebooks, like RenRen, big companies that do whatever the government there says to do, without a qualm. And the market is highly competitive. It's not that they can't get in, I don't think they can compete. And if you can't make it there, your growth horizons narrow.

The S-1 claims there are 845 million “active” users on Facebook. I'm sure they include me in that total. I'm not one. Lots of people come into Facebook, and leave. Social networking is a very quirky business, competition always just a click away. It's mostly people who came of age after the Web was spun, the people who will really define the Internet (in contrast to my generation, which just built the thing).

How sticky is Facebook, really? How devoted are how many Facebook users to living their lives on Facebook? Sure, Facebook has “second-mover” advantage, in that they overhauled MySpace and learned some things. But is this the last evolution of the Web, the final chapter?

I don't think so. I don't think that chapter has been written yet. And anyone who does, I'll take your money, drink your milkshake, haz your cheezburger. To succeed Facebook has to ride, successfully, on top of a myriad of changes that have not happened yet.

Its chances of doing this are fair. At least as good as Google's. But as good as Amazon's? I don't think so. The social networking boom, as I've written, began to bust as soon as its shares came to the public market. (Bought any Groupon lately? Any LinkedIn?)

Trade it for fun, watch it rise like a skyrocket (because it will in the short term). You may have if you will, but I will have not.

But as soon as the lock-in period ends for the big shareholders, be gone and on to the next big thing.

It's coming. It's out there. The next big thing is always out there.