May 19, 2012 swinney_admin

Facebook IPO – Fear of the Unknown

The long awaited initial product offering (IPO) for the world’s largest online social network hit the streets yesterday and seems to have received an underwhelming response by investors. Opening at $38 per share, Facebook barely nudged from its that price by end of the trading day. After months of hype and a roadshow by Zuckerberg, everyone is now left hunting for reasons why the megalith that has had such a huge impact on changing human behaviour seems to have been given the cold shoulder by the investment world.

Was it the numbers that scared them all away? The Facebook IPO is targeted to raise 16 billion in revenue for the social networking company. This would place the offering in the top 3 largest IPOs in the history of Wall Street. Or is it that lingering memory of early 2000 when tech stocks like Facebook burst their swollen financial bubbles spewing red all over the trading floor? Or… is it just common sense cutting into the investment decision? Something that is often hidden by hype and the lure to be become a millionaire over night by getting a piece of the excitement. I can’t imagine it has anything to do with earnings or the potential to generate revenue. Wall street knows how to position important things like earnings per share and long-term revenue projections when they really believe in the leadership of a company. Simple facts and the reality of the situation never seem to stop the bus. The power brokers know how to paint that with optimism and potential as opposed to the skepticism which has surrounded the Facebook IPO. Obviously they didn’t see the opportunity to line their own pockets.

Or … is this lack luster launch into public ownership a reflection on leadership and the difficulty people have trusting a 26 year old with billions of shareholder dollars? Zuckerberg’s a smart guy, but does he have the presences to make people believe in things that they either can’t see or that don’t yet exist? The outcome of yesterday’s IPO is a clear sign that he’s not God as some would have you think. In fact it brings into question whether or not he’s the right person to steer the ship of a publicly traded company. Now that the control of it is in the shareholder’s hands Facebook’s approach to doing business will need to take on a softer, more controlled and careful approach to how it evolves. Something Zuckerberg has never demonstrated to date. Something that tends to come with more experience.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>