Facebook’s poor performance is both a good thing and a bad thing. The good part is that they were able to raise an optimal amount of money to use to invest in the FB empire. They didn’t leave a whole lot of money on the table and that means that Wall Street geniuses are mad because they count on these highly publicized IPO’s to make a quick buck both for themselves and for their VIP billionaire clients. I consider that a net loss for Wall Street, and that’s just fine by me. The bad news is that now FB is a public company – there will be continued pressure to meet profit expectations quarter after quarter. This will lead to changes in the facebook model which will have a net effect on FB users.
A good example of that is mobile. People continually are getting information or using FB on their mobile phones where it is very hard for FB to place advertising on the phone apps. It’s not inconceivable that FB might look to monetize the mobile experience which means advertising on your phone when you log in and check your news feed. The bottom line is – the clock is now ticking and the pressure is on. Considering that according to a survey by Greenlight – 44% of Facebook users have never and never will click on a FB ad (source). That IS how they make money. If advertisers are not seeing a return…they won’t pay good Facebook a premium for their advertising. And that’s how Facebook is FREE for you and me. So – expect changes in the near future in terms of how they monetize the site.
“At 3:04pm – a brief respite – Facebook becomes the stock with the highest trading volume ever for a U.S. debut surpassing G.M.”
Facebook opened at $38 and at close of business 5/25/12 – the stock finished at $31.91 on the NASDAQ. (source)
Bloomberg reports HERE:
Facebook Inc. (FB)’s initial public offering, which set a record for technology companies by raising more than $16 billion, also has the distinction of producing the worst return among the largest U.S. deals of the past decade.
The CHART OF THE DAY compares the first five days of trading for the 10 largest U.S. IPOs from the past 10 years. Shares of Menlo Park, California-based Facebook have fallen 13 percent since underwriters sold them for $38 on May 17. The decline exceeds the 10 percent drop by MF Global Holdings Inc. in its first five days. Visa Inc. (V) did best among the biggest deals, rising 45 percent.
Facebook and Morgan Stanley (MS), its lead underwriter, have faced criticism for boosting the number of shares sold in the IPO by 25 percent last week to 421.2 million. They also boosted the asking price to $34 to $38 from $28 to $35.
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