This week Facebook hit Wallstreet
The IPO was not as successful as some had predicted. Facebook shares closed the day lower than at the opening bell.
This week Facebook hit Wallstreet. The first trade was made at $42.05 and by the end of the day the value of a Facebook share was $38.25. Apart from making Zuckerberg and several other Facebook employees billionaires, the story is not all that positive. Facebook has not received an overwhelming amount of “likes” for its IPO. I am not surprised. Facebook obviously has the advantage of having a huge subscriber base, but at the same time there are several issues that could easily bring down this social giant.
The combination of satisfying investors and social users is a fine line. I personally don’t have a clear picture how Facebook can monetize their platform, as the investors undoubtedly want to see, while keeping its users happy. I wrote in a previous post about the fact that Facebook is already testing ads admits the status updates of those users who live in New Zealand. It is unclear if Facebook is going to roll out this feature world wide, but I am convinced that this test is only the tip of the iceberg. If Facebook wants to appease investors they will have to come up with monetization strategies that will be acceptable to the social user as well.
One area where that may become noticeable in the near future is in Facebook’s mobile strategy. People spend more time checking Facebook on their smart phones and tablets than they do on their regular computers. Despite this interesting statistic, Facebook is still not monetizing mobile. With the shift in focus towards investors that may very well change in the near future.
Another issue for Facebook, in my opinion, is the fact that the search function is severely outdated. Have you ever tried to find a piece of information on Facebook? If it is not displayed on your wall in the most recent status updates, it is hard to find anything at all. In other words, once it disappears from your timeline, it is very hard to find again. To correct this, Facebook does not only need better technology, but it is also going to cost a significant amount of money to upgrade the system. I have been told that Facebook is using an outdated and not very flexible database as the basis for its platform.
At some point in time they will have to bite the bullet and upgrade. Will they be able to do this without major interruptions? And if not, what is the impact on the users going to be? Will they look for alternatives? Will Google+, for example, benefit, and take more market share away from the social networking giant? Will it cause a “MySpace effect”?
This, of course, assumes that Facebook will be able to pull it off at all. Will they be able to change the database setup, without loosing the data it has collected so far. Their database must be huge. It cannot be easy to change technologies at this point. But will they have a choice? And how play investors in this decision making process. It is going to be interesting to see how Facebook is going to do, now that it has investors watching their every move.
What do you think of the IPO? And where you surprised that the price went down, not up? Or do you think that that is a temporary thing and do you expect the price to go up next week or at least in the very near future? Feel free to share your views in the comments.To your success,