Facebook stock is not doing very well.
Lots of reasons for that, put forward by people much smarterthan I, which you can easily read about via a Google search
Some are even beginning to question whether Mark Zuckerberg can continue as the leader of Facebook (somewhere, the Winklevoss twins are howling with laughter). Clearly, the experiment of Facebook as a publicly traded company isn’t going well, though I think it is still too early to be called a failure.
In the past, I’ve made the argument that your privacy is not Facebook’s responsibility, and I still believe that.
How ironic, then, that I believe taking the company private again will benefit it in the long term.
The main problem facing Team Zuck at the moment is how to turn those millions of users into dollars that shareholders can benefit from. That’s the key. Not the profitability of Facebook, but whether the company can increase the value of the company in the eyes of Wall Street.
I don’t think Facebook going public was a bad idea; I think it’s an idea that happened before the company was ready.
While I don’t think comparing Google and Facebook’s IPOs is an apples-to-apples scenario, it is worth pointing out that Google was a much stronger company than Facebook at similar points before their respective IPO’s.
Google had figured out how to be a profitable company before opening itself up to being controlled by people that have no idea what the company is about. It has also transformed itself into a media company as opposed to just a digital company (i.e. Google is much more like Apple, Facebook is more like Yahoo!).
A few months ago, my WUL colleague Dan Cohen gave us his reasons to buy Facebook stock, and I agree. I don’t think the company itself is going anywhere.
However, by going public before it was completely ready, it opened itself up to control by people who are only interested in turning a profit rather than growing the company, and profits, that promotes longevity and sustainability.
Zuckerberg and the other Facebook principals should buy their company back. It will hurt their pocketbooks in the short-term, but to ensure the survival of the company, it needs to get advertising figured out, and how to monetize all those users.
It can’t do that as a public corporation.
At least, that’s what I think. What do you think?
Image: West McGowan via Flickr CC 2.0
@eprenen @debweinstein Thanks for the read and mentions, guys!
Hi @MattLaCasse yes the markets change things. If you notice a lot of hocus pocus facebook was doing now is getting fixed. We are getting more accurate analytics. Being a finance guy I want to know things in detail not vague numbers. Even the talking about number on brand pages is a big lie. It is not ‘number talking about’ it is a total for 7 days of all actions on the page. If I comment 10 times they count me as ten.
I actually think they stayed private too long. Most businesses go to market earlier and use the stock for money. But they took big investor cash and then were forced to figure out how to go public at $100 bil.
If they went private now they might not be able to go public again. If I bought at $38 and resold it to you at $20 would I buy your stock the next time you IPOed?
@clarity4theboss @geoffliving belated thanks for sharing @MattLaCasse #WUL post!
@geoffliving @shonali gr8 article! IMO Balancing needs of users against monetization is a struggle. Zynga’s financial woes was direct impact
@hessiejones @shonali I had an interesting conversation last week in Silicon Valley where someone could not compute revenue.
@geoffliving @shonali would like to see how this plays out. Has implications for Twitter as well. Are native ads sustainable?
@hessiejones @geoffliving Yes, it will be interesting – pulling in @MattLaCasse since it was his post (sorry for late reply!).
i don’t think the company is going anywhere – there aren’t any other options en masse, and I can’t get non-tech/early-adopters to move over to G+ for love or money. They’re still checking into Facebook by the millions X number of times a day. But no one has any idea what Facebook will really look like from one rollout to the next, and for all that we use it, how are they actually making money commensurate to usage? That’s still uncertain. And I think that still gives people pause.
I’m sure you’ve already seen the article in the Post recently (at the bottom), but if not, the pause-making quote for me was this one: “Whoever coined the phrase ‘information wants to be free’ was blowing smoke,” said John Morton, who has analyzed the newspaper business for more than 40 years. “Information is valuable, and it has to be paid for.”
http://www.columbiatribune.com/news/2012/aug/22/facebook-woes-show-investors-wary-of-freebies/
@jocmbarnett thanks for the rt John!
I agree with you, they went public before they were ready. I think greed got the best of them and to some extent the feeling that they are too big too fail. It wouldn’t take much to get Wall Street excited about this stock.
If Zuck is smart he’ll bring in someone that is seen as a heavy hitter to take over the helm and he’ll assume some sort of advisory position.
@thejoshuawilner Thanks for the comment, Josh. I think you’re right about the big hitter; though I think they already have that person in house. Put Cheryl Sandberg in charge of the business side of the company, and let Zuck go back to doing what he does best. Making Facebook.