Facebook IPO 2slo
December 6th, 2011 // 12:17 pm @ admin
I’m not a stock analyst but hey, there are monkeys out there that do just as well when it comes to guessing on the markets. I figure I might have an advantage in tech stocks since I use the products. Facebook’s IPO is supposed to be announced soon in 2012 and they hope to be valued at more than 100 billion (click here to read WSJ article on this dated Nov 29, 2011). Yet, they only report $500 million in net revenue for the first half of 2011 (click here to read Forbes article on this) . (Fact check: they have an estimated 6 billion in revenue in 2011). Who thinks they are valued at over 100 billion? In my opinion, it’s going to be highly overrated and in a few months will drop, much like Groupon. I’m going to go out on a limb and name my reasons why and we’ll see what happens:
Timing is everything. Facebook was hot a few months ago and that’s when they should have gone public. Since then many things have happened that have dampened the warm fuzzy feelings everyone was having then:
1) Other tech companies came and they’re not doing so hot. Linkedin came out at $122 and it’s now $73. Groupon came out at $31 and it’s now $19. Reach Local also is not doing so hot.
2) Google+ branded pages just came out. Those didn’t exist a few months ago. Facebook now has competition. It’s nice when you don’t have competition and Google would love to eat their shorts so I expect swift and cool improvements to come soon.
3) Facebook recently made significant algorithm changes that negatively effect small businesses, especially those with fewer than 1,000 fans. Yet, it is small businesses that represent a majority of their advertisers. Facebook is interested in large corporations like Ford yet companies like Ford can easily gain the “viralness” they need due to their size and presence and when they do, they quit paying for the ads. The last Ford Facebook campaign for the Ford Focus did just that. Ford decided to quit paying for Facebook ads once they reached 10,000 and chose to use their marketing dollars on other online sites. Here’s’ the WSJ article about this issue.
4) In addition to the algorithm changes Facebook also made changes to it’s overall structure making it more difficult to setup a personal profile much less get started with a business page. The beauty of Facebook was it’s ease with which non-computer/non-tech people could create an account and get started and get connected. It’s not so easy now and managing your page isn’t easy either. As a person that teaches Facebook for Business I’m beginning to hear lots of complaints from small business owners. It doesn’t take much to frustrate them and have them drop it all together. Afterall, we have better things to do. Small businesses are like fish – highly sensitive to the slightest changes. It only takes one bad change to make Facebook unpopular. Netflix could learn from this and so could RIM.
5) Facebook changes are made so frequently people can’t keep up. Change is good but failure to notify people, provide accurate training or otherwise quick support makes taking change a bitter pill to swallow.
6) And, of course, there is the problem of privacy. Facebook just got into trouble over that again in Europe and it’s uppermost in the minds of small business owners… Believe me, I hear it. I’m waiting for the big slip that causes Facebook to tumble in America. Hmm.
7) Lastly, it all comes back to timing. When the economy improves and people get back to work they will have less and less time to be on Facebook. It became popular just when we entered the recession (around early 2007) and it gained because of it’s ability to connect with people and for advertisers to get in front of college students and what I refer to as the “SUN” people – the Self and UNemployed (cause sometimes being self-employed feels like you’re unemployed). Well, the young kids are losing interest and as soon as the economy picks up, people will have other things to do. I’m beginning to see green grass.
PS – the other usual death trigger to tech companies – when they decide to hire thousands of people. Well, Facebook is getting ready to do just for that.
Category : Social Media News