Facebook IPO has gone through a huge price plunge since the day it started trading, from the peak of $45 on the first day of trade to the latest close price of below $29. That is a 35.6% slash comparing those two numbers. So what went wrong with the young super giant? Or may we put it as the super young giant?
Well, personally, I don’t believe there was over-evaluation of the Facebook IPO in the first place. It’s just market isn’t always a place where rationality prevails. Despicable as it is to just warn big investors of the lowering of its financial expectation, Facebook has not digressed from its alleged mission of “making the world more open and connected” by succumbing to monetization over user experience.
Would an instant price surge of Facebook stock be favorable? Yes, but only when it did not come at the expense of its users’ experiences and when the site maintained reasonable schemes for the monetization of its traffic. There have been too many examples of failed genius startups that succumbed to investors’ request and tried abusing their traffic only to get a merely looking-good financial report sheet. They might see a short-term revenue soar and flocks of investors holding tight the belief that the brilliant financial forecast would for sure yield the best financial returns. But in exchange, those startups lost what mattered the most, the user experience, and thus the user stickiness. And people just started looking for alternatives, both consciously and unconsciously, and without exception they all ended up ditching the old ones.
I suppose Zuckerburg has well learnt from these experiences, and that’s why he did not sell the company in its youth, and that’s why Facebook did not turn into another Friendster. Sustained growth is the bottom line and Zuckerberg knows the key to it is making it “cool” so that it can keep driving in people.
Does the stock price really reflect the true value of Facebook? Well, I see it too early to judge that. There might be hidden facts just like the financial expectation altering right before the IPO. Who knows? But as long as Facebook still puts users foremost and keeps catering for their genuine needs even under huge pressure from its board of investors requesting for instant financial gains.
People who did buy Facebook stock, especially at its peak of $45 or around could so easily flip out and ganged up trashing Facebook and so forth. I believe what Facebook has done could be a little unethical, but it does have achieved its pre-assigned mission of getting the fund for its future perfection of the site. Be it right or wrong, Facebook’s current stock price can hardly represent its true value. And given it a little more patience and faith, FB could just be another AAPL with soaring stock price of over hundreds of dollars.