http://www.aljazeera.com/business/2012/07/20127285533626683.html
Facebook share prices fell even lower into a record low price since the company's debut in the market after the announcement that Facebook had a loss of 157 million in the second quarter. Facebook's stocks have been flopping ever since its market debut on may 18th. The companies earning as bad as they may be have been within the operations estimate of of $515m on $1.18bn in revenues. According to the article, Citi analyst Mark Mahaney said the company "has established itself as an Internet utility, but it might take a while for Facebook to gain Wall Street love".
I find it interesting that a company that is so popular, and widely used has such bad stock prices. Maybe Investors are worried that facebook will eventually be replaced by other competing companies.
ReplyDeleteIn my mind it seems appropriate that Facebook would do so poorly. It is a new type of stock which is completely unknown, and unlike the dot com boom in the past, investors are skeptical. They have every right to be as Facebook has shown to be usefull at providing a superior social network service, however it's bog plus is that it is free to users. It seems unlikely that users will support Facebook, if they were forced to pay for it, espeacially in the presence of competitors such as google plus. Furthermore, the presence of ads does not seem to be enough to generate revenue steady enough to invest in, and the privacy concerns of trying to increase revenue that way have been well documented. As great of a service as Facebook is, until something drastically changes in it's business model, I see no reason for it's stock to apreaciate above it market value from it's IPO.
ReplyDeleteOf course it will do poorly, it is generating very little revenue from anywhere. It should never have done an IPO because there really was no solid reasoning for it to appreciate in value. So I have to agree with Brian that it was never going to do well and it never would do well unless something changes in its business model. Just because something is popular doesn't mean that it is a good investment decision.
DeleteI agree with Brian, although I do wonder what would happen if Facebook started to charge users fee for the service they provided. Like it or not, facebook has played an important role in the lives of many people. If the price charged is not too much, I don't really see any unwillingness that can arise from the users' side.
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