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The Digital Skeptic: Making Book on Facebook

Tickers in this article: FB

NEW YORK ( MainStreet) -- For better or worse, in these nutty days, you just can't judge Facebook(FB) by its cover.

On the downside, the social media giant is finally sobering up to reality after its pre-IPO crack high. Investors are figuring out that a business with Harvard, Goldman Sachs (GS) and a major motion picture behind it actually might not be much of a business at all. Instead of headlines and widely quoted figures about Facebook being magically worth $50 billion, as was the case when Goldman placed its Facebook bet in January 2011, now the headlines say that this book has lost $50 billion in value since it went public.

And the howling chorus of questions about the firm is on the rise.

Rob Cox, who reliably writes about digital investments over at Reuters' Breakingviews , noticed that while sales and subscribers sound cool, costs matter too. Revenue may be up $2.4 billion in the first six months of 2012, as he wrote last week, but costs rose even higher -- to $2.6 billion in the same period.

Even the gritty issues of social media click fraud and ad effectiveness are finally dinner table conversation for investors. Manorville, N.Y.-based Limited Run , which offers a Web retail sales service for bands and artists, was widely reported to have deleted its Facebook page due to nonhuman bots that sapped value.

To be fair -- which is most definitely getting overlooked in this ugly din -- Facebook is taking these issues seriously. Limited Run said in a follow-up post that the company is investigating its problems. And the social media giant is conducting industry outreach. It worked with a metrics shop, Reston, Va.-based comScore, on a white paper called The Power of Like 2 to spell out the argument for social media as an ad medium.

And -- even more startling for Facebook -- real company executives are answering real journalist's questions. Mark Rabkin, a director of engineering, submitted to a Q&A with Forbes, and in it he did a reasonable job of explaining the company's security concerns and revealing that the operation has a legit staff of 300 people who manage spam.

So the question becomes: Has Facebook finally gotten on with the boring business of managing a real business in the diminished realities of the digital age? It indicates that maybe, behind all the negative chatter, lurks an investor opportunity.

The answer, of course, is that so much of the book on Facebook remains unfinished that your guess is as good as mine.

Is there a finished book in Facebook?
The essential takeaway when dusting off the cover and flipping through the pages of Facebook is how much of this fabled company remains just that, a fable.