The Facebook rise and IPO will be studied by business students, stock analysts, regulators, and Wall Street for decades to come, not merely because it was the second largest ever, but more because of the fallout afterwards and the chaos which ensued the day of the offering. Apparently, in hindsight we see that the Facebook IPO was mispriced and that's perhaps what started the problems, as it never got the IPO first day boost that it really should have.
This coupled with the earnings per share at a multiple well above the average on the stock market meaning as things settled down so too did the stock. Then came the big kicker, in October and November of 2012 nearly 70% of the pre-IPO stock unlocked and those original investors, executives, employees could all sell their shares on the open market. This could be a real problem for the company's stock as it sends the stock lower temporarily, unless Facebook finds a way to generate huge sales growth and earnings it could lose its luster - which could very well affect its notoriety, brand name, and "coolness" and that means it may not be well "liked" as it once was by users, investors, and on the global stage of social networks.
What many people may not understand is that if Wall Street turns its back on Facebook, and the investors do as well, it will lose its luster, its image, and its future ability to brand itself as the leading social network. Therefore, whereas what happens on Wall Street may not be of concern long-term for the leadership at Facebook, at least not presently, it will very much impact the future viability of the company, and its credibility with all of its users. Am I suggesting that Facebook will someday implode?
No, not necessarily, and although it is possible, it may just end up fading away as MySpace had in the past. Some might say this is impossible, but if you consider how the Internet works, and how in any five-year period there will be large companies come and go, then you can understand that this is a distinct possibility.
Consider companies like Yahoo and Northern light in the search engine space. Yes, those companies are still going, but they are no longer the leaders that they once were. Another one might be AOL, and I think at this point you're beginning to see what I'm trying to say here. Indeed I hope you will please consider all this and think on it.
Managing Employer Stock Positions What Is a Bond's Yield to Call? Ever Thought of Being a Trader? Was It An Anti-Obama Mini-Stock Market Crash, Individual Stocks Down 1 to 2% Across The Board
0 comments:
Post a Comment