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On the Second Day of Trading, Facebook Fell

On the Second Day of Trading, Facebook Fell

 

Tanked. Slumped. Declined. Tumbled. Skidded. Belly-flopped. Whatever word you use, on its second day as a public company, Facebook’s stock fell 11% to close at $34.03, below Friday’s offering price of $38. At one point, Facebook’s stock was down 12%, to $33.56 on the Nasdaq. There went the initial euphoria over the social media company.

But why the short honeymoon?

CNET says it’s a simple fall from a bubble of hype to reality:

There are a lot of reasons: glitches with the Nasdaq system that slowed early orders, an IPO price that got a last-minute bump, and indications of lackluster demand from institutional investors. But the most important is the underlying concern and growing realization that Facebook just isn’t worth $100 billion.

Morgan Stanley is sharing the blame for why Facebook CEO Mark Zuckerberg (with his new status) found himself with a net worth $2.1 billion less on Monday, as compared to Friday.

Nearly 1 billion Facebook users log into the site each month, and nearly half a billion check the site daily. As noted before, Facebook has yet to figure out how to make a real profit from all those users (from us) through advertising and through its mobile app. The problem for Facebook lies in what people use it for and in how they use it, in ways different from Facebook’s main rival for ads, Google:

The dilemma… is people don’t go to the site to be bombarded with ads. The display ads that do show up generate a decent amount, but given its large base, Facebook should be generating more revenue….

Google, on the other hand, serves up targeted ads based on what a user searches for, something advertisers and companies are willing to spend bigger bucks on. With a search query, there’s often an intent to buy that’s not there when you’re on Facebook to check on the latest status updates of your friends.

On Friday, with its initial price per share of $38, Facebook was valued at $100 billion. The stock’s performance on Monday suggests that, while the company might be worth that much someday, people don’t think it is now because, says CNET, ”the company still doesn’t quite know how to fully take advantage of its huge user base to generate revenue.”

Facebook might be a great way to keep with up with the latest that family members and friends are up to; it is hard to avoid it, as so many people use Facebook to share information, photos and such that in an earlier era (i.e., three or five years) they would have sent via email. But just recently, another mother of a child on the autism spectrum noted to me how difficult it is to keep of things — bits of advice, helpful websites and resources, shared snippets of “a day in the life” raising a child with disabilities — on Facebook.

As a debate on ZDNet proposes: Will Facebook still be the “king” in five years or relegated to “has been” status?

(Remember MySpace. Remember AOL.)

 

Related Care2 Coverage

UPDATED: Facebook Bans Mother Over Photos of Baby With Rare Birth Defect

Facebook IPO: No Pop But Still Lots of Likes

5 Things To Know About Facebook (Slideshow)

 

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Photo by Keith Bloomfield

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47 comments

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9:02AM PST on Feb 19, 2013

Thanks for sharing.

10:51AM PDT on May 23, 2012

Facebook is a fad, and not anything worth investing time or money in. Or maybe it dropped because people heard that the CEO renounced his citizenship to avoid paying taxes. SHAME!

9:05AM PDT on May 23, 2012

I personally predicted it's not worth investing in. It's not a product. It's a gathering club. Seems strange they didn't try putting this IPO up in the early stages, maybe it woulda done better than 23 cents the first day......hahahaha

8:39PM PDT on May 22, 2012

Trickery and Deceit.

6:19PM PDT on May 22, 2012

I abhor facebook myself. Couldn't care less about this.

4:31PM PDT on May 22, 2012

This is a site that recently forced a woman to remove pictures of her child who has Down's Syndrome, that disallows postings and discussion of, e.g., children with disabilities such as autism, that claims ownership of everything posted on the site, including members own photographs and pictures and writings under copyright...and I'm supposed to care that it flopped? As has been reiterated in numerous articles, it's a dangerous site, especially for children, and I'd very much like it to disappear. As it is, I can't get away from the damn thing, for pop-ups urging me to 'share' on it appear on just about other site I look at. Even Skype has fallen for this. There is no privacy any more, and FB has played a huge part in its demise.

3:47PM PDT on May 22, 2012

Too bad...so sad!

3:02PM PDT on May 22, 2012

As expected but less of a fall than anticipated.

2:41PM PDT on May 22, 2012

Frankly my reaction to the first stock news on facebook was that if I owned stock in it, I'd sell it right away. It sounded like a cyber bubble right away.

1:28PM PDT on May 22, 2012

Facebook fell on it's face, eh? Pity. Too bad it isn't named Assbook. It might not have hurt as much.

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