08/27/2012 01:45 EDT | Updated 10/26/2012 05:12 EDT

Facebook Is Immune to a Dot.Com Bubble-Like Crash

A Facebook worker waits for friends to arrive outside of Facebook headquarters in Menlo Park, Calif., Friday, Aug. 17, 2012. Facebook's stock has come a penny short of hitting $19 for the first time, meaning it has nearly lost half of its market value since its public offering in May. (AP Photo/Paul Sakuma)

Long before facebook's IPO in May, I was one of the harshest critics of the social network; warning of its structural problems that tick off users and threaten privacy and profits.

But now that the stock price has plummeted to below $20 from its $45 IPO, even I am having trouble with all these "Chicken Little" investors and media pundits comparing Facebook and other social media stocks to the bubble and bust of 12 years ago.

Yes, Facebook stock is struggling and it may struggle lots more as the shackles are taken off company insiders, which will allow them to sell more into the market in the coming months.

But Facebook is real. It is not a vendor of vaporware like so many of those companies that never earned a penny but burned through cash faster than Mark Zuckerberg could burn through old friends.

Two things to keep top of mind: first, Facebook has almost 1 billion users worldwide. That is an incredible number. Put another way: It was the year 1804 that Napoleon was crowned Emperor and the world's population reached 1 billion for the first time. In less than a decade, Facebook has that many people on its network. Think about that for a moment -- and the fact that less than 20 per cent of Facebook users are in North America making it a truly global phenomenon.

Second, when you have teenage girls and corporate CEOs coveting the same technology at the same time, something extraordinary is happening. The great busts like, or never had such a mélange of demographics.

Facebook reaches more people than all the TV networks in North America and Europe combined. It spans time zones, countries and demographics. And it possesses data so deep and rich that it makes marketers salivate.

Sure, most of these marketers (and Facebook folks, too) haven't figured out 'best practices' for putting these vast resources together, but I bet they will. There's a ton of value hidden there - it just has to be mined pragmatically and balanced against privacy concerns.

And it's not like Facebook can't get help from others to figure things out, either.

Take Google, for example. It started as a research project in 1996 and was launched in 1998. Then it didn't figure out how to make money until 2000 with Adwords and has been going gangbusters since. Its latest creative idea just launched for YouTube, which it owns. Advertisers pay only if users watch their ad. Think about that. If the user CHOOSES to watch then they're actually the type of candidate that the advertiser wants. Advertisers get better segmented and targeted opportunities and users don't get pissed off if they're not interested in seeing an ad.

Google is trying to be responsive to users while meeting the needs of advertisers. It's not necessarily perfect, but it's a great example of trying to be innovative as opposed to forcing legacy models onto a digital frame.

For Facebook to emerge from this negative state, I stand by previous things I've written: Facebook must focus on its nearly one billion users, treat them with respect and keep them happy and they'll take care of company profits and stock price. Don't try to shoehorn your new platform into last-generation advertising thinking. Don't be creepy - bring value and the profits will come.

It makes no difference that Facebook is now a public company. Zuckerberg et al should ignore investors for a while. Jeff Bezos at does that at times, and he and his company are doing just fine.

Frankly, people are going way overboard on negativity about Facebook and social media companies in general. Analysts at Gartner Research would call this the 'trough of disillusionment.' The sky is not falling on social media.

And as for media fanning the flames on Facebook's falling stock and flagging future, anyone who has taken a securities or investing course knows that traditional media are a terrific 'lagging indicator': by the time they recognize a story, the trend or pattern is already on its way in a different direction.

Instead of reading doom and gloom about Facebook, look for signs that Facebook is putting its users first and making them happy. (Remember, so much of the Facebook is dead stuff you read is on Facebook. That is worth noting in itself because it has the network.) If you see Facebook putting users first (a la Google), then it just might be the time to buy.