This sounds great and I want to believe it, but it feels like another case of someone saying the sky is falling when it clearly hasn't. What will it take for this advertising bubble to pop? Is it even a bubble?
Funnily enough, the ad based tech companies have the most reasonable stock prices. Facebook and Google are massively profitable, still growing at double digit rates, and each have only mid twenties PE ratios (the same as Caterpillar Heavy Equipment, or electric utilities like ConEd and PG&E).
Meanwhile there are companies out there like Lordstown Motors, Lucid, and Nikola, which have never sold a product but have billion dollar market caps. Nikola is universally known as a fraud, somehow has negative revenue, and is still worth $5 billion. EVs are the real bubble.
I agree with some of what you are saying, but on a deeper level I don’t think a 25 PE ratio is particularly healthy so I’d say the real bubble is an everything bubble we are currently in. Facebook and Google have some of the lower PE ratios right now because they actually have earnings.
>The current S&P500 10-year P/E Ratio is 37.8. This is 91% above the modern-era market average of 19.6, putting the current P/E 2.3 standard deviations above the modern-era average.
I'm not saying EVs are useless, or vaporware. Maintaining the comparison here, you look back and can see that the internet was clearly incredibly valuable and impactful in essentially every describable way, but there was still a dotcom bubble full of egregious excess.
Years ago, I read a book that categorized the development of consumer products in a three-phase evolution:
Phase 1 - Small firms serving whatever they could shove out to market in a scattershot way. Think of the early 1900s automakers who made 30 cars each before closing or merging away.
Phase 2 - Volume scale products are established which rolls over much of the market with economies of scale and price-first design. The Ford Model T is the canonical example.
Phase 3 - Brands get established to target different consumer niches rather than direct price competition. Think of the golden era of GM where there was more or less a clear market segment and message behind Pontiac vs. Chevrolet vs. Buick.
I think many investors see EVs as a "Phase 1" product-- they're willing to bite on hype and random bad ideas, because they expect someone is going to execute big to become the Phase 2 market leader, or even end up as a focused, high-margin Phase 3 brand. We don't know who that is now, so bet on everyone!
On the other hand, there's an equally compelling argument that EVs are less a new market and more a variant of the overall automotive business that's already reached "Phase 3". Existing brands know their places and markets already, so there may not be that much realignment as they replace fuel tanks with batteries.
Tesla has proven it's possible to muscle into the market, but a lot of that was by identifying an unserved niche (the luxury consumer-covetable EV, instead of the minimal-for-legal compliance EV intended to sell to government fleets) which provided enough volume and high-margin sales to bootstrap their play. They couldn't have competed by trying to sell the Model 3 in 2012.
They are naive, they really think advertising doesn’t work. It works it’s ass off. You can’t find one identity that isn’t influenced by it.
Real programmers use vim. I could sell that for ages. Don’t play games with advertising, you are just as much of a cuck as everyone else (rhetorically speaking, not you specifically).
Anyways, real programmers read HN. I could sell that forever. You think you’re smarter than all of this? Real programmers _______, and by god, you will fucking buy it. Here’s some Rust for you, you real programmer. I’ll inundate you, this stuff works.
There is the book on this called 'Subprime Attention Crisis' by Tim Hwang that tries to argue this point.
It is only partially successful in its goals of saying the sky is falling.
The overall message I came away with was that online advertising has some serious issues that need addressing - but they aren't anything that cannot be solved.
If there is a bubble then I suspect it isn't anywhere near as big as it is made out to be and that any "crash" will be more of a slow correction than the bottom suddenly dropping out.
I'm sure 99% of Apple users would be happy with a popup on first use of Safari that asked "would you like to block adverts?". It would be no skin off Apple's nose.
They already essentially killed off "ad supported apps" with App Tracking Transparency, and Apple doesn't earn anything from ads anyway (as opposed to paid apps where they take a cut).
Yeah, for now. I'm doing my part to change that. People love the fact uBlock Origin blocks the idiotic YouTube ads. There's always Brave if for some reason they can't stand Firefox.
And hey, if Apple will crack down on Facebook's espionage over privacy concerns, who says they won't do the same to these advertisers and their abusive surveillance capitalism? Maybe they'll realize that advertising is pure noise nobody cares about and block all ads in order to improve usability. Maybe one day they'll get pissed they aren't getting their fair 30% share of advertiser revenue and block them out of spite. Maybe they'll wake up one day and simply decide to kill the ads industry. Now that's a delusion worth having.
Apple's privacy stance is questionable (see the recent content scanning debacle).
Plus, I would say they profit more when the web experience on their devices is inferior to apps, which means annoying ads and popups help drive people to use apps, which Apple profits from... (and some companies, like Reddit, actively participate in annoying their own users to get the app).
> if sites can't make money, there is no web to browse
There are other ways to make money other than advertising. If they insist on ads, they should disappear.
Besides, not everyone creates a website for profit. Sometimes people just have something interesting to say. The web used to have a lot of those before these commercial interests started infesting it.
Sometimes I feel like ad block users get overzealous and try to convince themselves and others that every ad out there is trying to inject malware into your machine. Very few ads do this and the average person who doesn't use AdBlock won't ever have that happen to them. Ads solve an economic distribution problem by cutting the transaction of spreading and consuming information in half. It makes the web accessible.
