The IPO of Facebook should have been the big NASDAQ event of the year…but after a few days it turns out that the Facebook story is short tale instead of fairy tail! However conclusions can’t be made over a few days, future will tell whether Facebook is able to turn his IPO into a long tail success. Mobile will be the key element in the success of Facebook’s long tail.Friday May 18th….Marc Zuckerberg opens the NASDAQ stock exchange introducing the Facebook stock to the market. The hyped price of 38 dollar raises within minutes (as was expected), but falls back an hour later, thanks to the back-up buy of Morgan Stanley Bank (which helped Facebook introducing it’s stock to the markets) the stock didn’t drop below the introduction price. But when markets opened on monday (and again on Tuesday) Facebook stock went down again and again….so is the bubble already bursting? Probably not….Is Facebook going bankrupt? Probably not….Does this show how difficult it is for an internet company to be valuated correctly? YES!
The value of Facebook raised to staggering heights over the last year(s) with every new Facebook user a new total company value was reached. Facebook is not a hype, it’s a communication (collaboration) platform where we connect to (long-lost) friends, family and others….together with our likes and preferences Facebook collected a huge data collection which it sells to advertisers (so we can be personally targeted)….but while they focused on getting more data on its users Facebook lacked the see the evolution of modern society…the mobile revolution.
More and more people are starting to use mobile (and want to connect to Facebook through their mobile device), and apps…Facebook has waited a long to time to hop on this mobile wave, introducing its apps very late in de cycle. On top of the late launch of the mobile Facebook, the apps aren’t giving the same experience as the browser and don’t provide as much space for advertising. So less service satisfaction and less income possibilities make mobile a true challenge. Investor markets tend to feel this very soon, (and word/rumour of declining turnover) made a lot of stock buyers sceptic about the company….and therefore already dropping their stock.
But if Facebook can make the switch to a mobile (and later virtually augmented) environment, where it can value its data collection with the market. Investors (and others) will probably turn this page round, and will become interested in the Facebook stock (which off course will raise the stock value).
This mobile challenge will be the true challenge for this young company. Will it be able to transform of will other companies pick in this market (meaning the beginning of the end of Facebook)? Facebook is at least trying hard to transform, the acquisition of Instagram being step 1….let’s see what’s next in the mobile (long) tail of Facebook!?
Future will tell….(and as always whether this stock market introduction was succesful or not,…we’ll know in a couple of months or even years!)
To be continued!