There was a lot of skepticism when Facebook hit the public market. It wasn’t just that some were questioning the move to go public, but the IPO price seemed a bit out of whack.
$38? Really? It seemed a bit high. And apparently, it was. The stock has hit a record low $18.06 (my e-Trade app says $18.058, but who is counting?) on Friday.
And it’s not just individual investors that are feeling the burn. Public pension firms, according to a report, are getting stung by the fall of this stock to less than half of its IPO.
Granted, they wouldn’t bet the bulk of the retirement of public employees on a company that let’s you share drunken pics of your friends. Not at all. It’s a very small percentage of their fund, but that doesn’t mean that they aren’t feeling it.
My big concern when Facebook went public (in terms of being an investor) was: “where are the growth opportunities?” Facebook has already made their quantum leap from small startup to industry giant. So, those thinking they are getting in on Yahoo! or Google on the bottom floor are going to be sorrily mistaken. However, there is one area where Facebook could really grow and recoup their stock price: Mobile ads.
The truth is, more and more people are only using Facebook on their mobile device. The problem with that is that the revenue model for mobile advertising has not been created yet. Sure, you’ll see ads pop up from time to time, but it’s not the type of money that is going to come in when someone figures out how to be the next Google AdWords on mobile devices.
That is a huge area for growth, so Facebook is far from dead in the water as far as stock prices. But, until then, people and entities such as public pension funds aren’t going to be happy with their returns.
