When I was younger someone once told me that if you wanted to succeed on Wall Street, ask 100 kids what the greatest things out there are...buy up as much as you can afford of the top 3 answers!! When I was younger, that made sense. The youth aren't the ones with their fingers on the pulse of business....they are the blood flowing through the veins!! Now, like picking a horse at a race, conventional wisdom says to listen to the people that spend all their waking hours analyzing and watching to find the best bets on Wall Street.
On May 18, 2012, Facebook held their IPO (Initial Purchase Offering). The Nightmare began. It started with technical problems with the stock exchange itself (NASDAQ) delaying the opening and then not being able to confirm trades were being made. Then was further plagued by rumors of Facebook financial officials and the some of the underwriters providing select clients info on the over-valuation of the IPO. Unfortunately, Facebook was simply not the juggernaut Wall Street analysts had pegged it to be, and grossly over-valued the company at over $100billion! With Facebook releasing extra shares and the price at $38, there was simply too much money needed to make the IPO successful.
Facebook's is not even close to waking up from this dream either. As early investors faced a lockup period before they could sell their shares, those periods are expiring until next May. At first reaction, there appears to be a bit of a dump off resulting in even more shares being available in the market and further driving down the price.
If only Wall Street listened to the kids.
The kids would have told you that Facebook is their most visited website. They would tell you that they post several times a day. They would tell you that they don't know how they did things before Facebook. With all that info, it would seem Facebook would be a sure thing. Not so fast!! Listen a little more to those kids. They will continue to tell you that they access Facebook almost exclusively with their mobile devices. They will tell you that Farmville and similar popular web-based Facebook apps, just didn't transition well to their devices and have since stopped playing. Zynga is doing their best to keep up by acquiring apps like "Draw Something". Unfortunately for Facebook, in a niche where they started as the pacesetters, technology has taken over. Facebook, was not prepared, and is now in a position of playing catch-up. CEO Mark Zuckerberg has yet to clearly define how Facebook will sustain the "goldmine" of revenue it has built though its website during the transition to mobile devices where advertising seems to be as wanted a solicitation call in the middle of dinner! As more and more users stop opening their browsers and start using their phones and tablets, Facebook is losing ground on their valuable business model.
Facebook and their shareholders are going to need CEO Mark Zuckerberg to step up fairly quickly and pull another rabbit out of his "hoodie". The largest of the lock-up periods is only two short months away. Zuckerberg is officially "on the clock" to paint a clear picture of Facebook's future, and how the mobile transition will be managed to continue to produce revenue streams large enough to support the over-inflated valuation Facebook received. Here is my tip to Mr. Zuckerberg - Listen to the kids!
On May 18, 2012, Facebook held their IPO (Initial Purchase Offering). The Nightmare began. It started with technical problems with the stock exchange itself (NASDAQ) delaying the opening and then not being able to confirm trades were being made. Then was further plagued by rumors of Facebook financial officials and the some of the underwriters providing select clients info on the over-valuation of the IPO. Unfortunately, Facebook was simply not the juggernaut Wall Street analysts had pegged it to be, and grossly over-valued the company at over $100billion! With Facebook releasing extra shares and the price at $38, there was simply too much money needed to make the IPO successful.
Facebook's is not even close to waking up from this dream either. As early investors faced a lockup period before they could sell their shares, those periods are expiring until next May. At first reaction, there appears to be a bit of a dump off resulting in even more shares being available in the market and further driving down the price.
If only Wall Street listened to the kids.
The kids would have told you that Facebook is their most visited website. They would tell you that they post several times a day. They would tell you that they don't know how they did things before Facebook. With all that info, it would seem Facebook would be a sure thing. Not so fast!! Listen a little more to those kids. They will continue to tell you that they access Facebook almost exclusively with their mobile devices. They will tell you that Farmville and similar popular web-based Facebook apps, just didn't transition well to their devices and have since stopped playing. Zynga is doing their best to keep up by acquiring apps like "Draw Something". Unfortunately for Facebook, in a niche where they started as the pacesetters, technology has taken over. Facebook, was not prepared, and is now in a position of playing catch-up. CEO Mark Zuckerberg has yet to clearly define how Facebook will sustain the "goldmine" of revenue it has built though its website during the transition to mobile devices where advertising seems to be as wanted a solicitation call in the middle of dinner! As more and more users stop opening their browsers and start using their phones and tablets, Facebook is losing ground on their valuable business model.
Facebook and their shareholders are going to need CEO Mark Zuckerberg to step up fairly quickly and pull another rabbit out of his "hoodie". The largest of the lock-up periods is only two short months away. Zuckerberg is officially "on the clock" to paint a clear picture of Facebook's future, and how the mobile transition will be managed to continue to produce revenue streams large enough to support the over-inflated valuation Facebook received. Here is my tip to Mr. Zuckerberg - Listen to the kids!
Comments
Post a Comment