No question, the company’s really cool, has revolutionized the ways in which the world’s citizens stay in touch with one another and share information. I’d argue that Facebook has been a game changer. And its uber-charismatic head honcho, Mark Zuckerberg is enigmatic too. It had, or maybe still has all the trappings of success. Problem is, if the company’s stock price is anything to go by, it’s a flop.
Sadder yet, a friend was recently at their California HQ and saw a red and white poster affixed to a wall, bluntly asking “What could go wrong?” Below in black ink, someone had scrawled in tiny letters, “Everything”.
A mere four months ago, it was hailed as the most valuable tech company to ever have hit Wall Street. As I write this piece, its stocks is down another four percent, trading at $19.28 a piece – less than half of what they were three months ago. Zuckerberg and his team of hench-men/people (to be politically correct), Sheryl Sandberg and Dave Ebersman have left Wall Street and financial analysts wondering whether they have the acumen to deliver on their once-lofty promises.
Their IPO was riddled with problems with exceptionally ambitious pricing. All sizzle, no steak. Not only were Mark, Sheryl and David caught unprepared, but worse, so too were Goldman Sachs and Morgan Stanley – both financial titans. Now Facebook needs to convince the unforgiving street and miserable investors that it is not a fad and that indeed its business model is solid. Problem is, there’s no evidence I’ve seen to suggest it’s solid and not just a fad.
In some ways, the Facebook saga reflects the increasingly uneasy truce between The Valley and Wall Street. Simultaneously symbiotic and dismissive of one another, each is focused on making money with different approaches. Wall Street wants to see revenue and profitability growth. The Valley wants to see coolness – hence the unease. And in reality Facebook’s exec’s while they may know how their tools will forever change the world, have not revealed any such plans. It’s a disaster to say the least.
No question, Facebook’s public offering has stuffed its coffers with scads of cash. And as a result, the company is trying to show investors its aggressive expansion plans, investing in expensive engineers and data centers. But sadly, it’s not enough to stop its stock from continuing to tank. Seems like the more it invests, the more its stock dives.
Facebook’s also trying to show that not everyone is fleeing its stock like rats off a sinking ship. Reed Hastings, a director, bought $1 million in shares. But that was miniscule compared with the $9 billion in shares sold by insiders at its peak public offering price. To note also, since then, another director and an original investor, Peter Thiel, sold more than 20 million shares. What does this say about insider’s confidence levels? You judge!
I think also that wireless is where it’s at – Facebook’s biggest single challenge. "Our mobile future,” reads another poster on Facebook’s sprawling camps. The company says it’s focusing on making Facebook more attractive — and lucrative — on mobile devices. It promises to roll out new features in the coming weeks. We’ll see how successful this is (or isn’t) – the jury’s out.
Meanwhile, all eyes are on Zuck and his leadership skills. The same qualities that created his coolness factor, including his quirkiness and ambition, are now what even his most ardent fans are questioning. Methinks he’s doing a worse job of managing Wall Street than he is of managing the company. And nor does it help that Wall Street and The Valley speak entirely different languages. Translation services Zuck?
There’s a new term doing the rounds on the Internet – it’s called being “Zucked”, as opposed to being “F%^&*d”. It’s what you call someone who loses half their fortune fast. Oh, woe. Poor Zuck!
At least I’ve not been “Zucked” – my fortunes are still intact.
Note: I am neither long nor short on this stock. This piece should not constitute any investment advice.
2 comments:
900 million users - can Facebook build relationships with its users? - does Facebook have demographics of its users? can Facebook build a portfolio of products and services to sell to its users?
Looking at the product itself: It was brilliant because it filled a variety of timely needs in the western world. It allowed people to create a personal web site without spending anything but time. It allowed a sheltered generation to interact socially, at first seemingly safely. It allowed aging boomers to find old friends and reconnect seemingly safely. Some of these needs are going to continue to be valid for some time, especially in the developing countries, where Facebook is still growing.
But in the developed world it is losing its appeal a bit, partly because bad apples created a privacy concern -I think good thinking, planning and marketing by Facebook could have overcome this. I also have problems with its design and navigation. Did they learn anything from Apple about simple and clean?
Looking at the IPO: Let's be honest Zuckerberg looked at the growth charts and saw that only the developing world was growing and he knew it was time to cash in his chips. He will finish this process roughly in December. Who can blame him?
The people who mishandled the IPO are emblematic of the general havoc wreaked on our planet by greedy, unrealistic money people, who still have not realized that life in the future will be about balance in all things and fairness. If you got involved and got burned you have only yourself to blame, for allowing yourself to assess the hype, rather than the true facts.
Bruce Nagy, Toronto
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