Monday, May 21, 2012

Facebook fizzle

I do not now and I never have owned shares of Facebook, now officially known to the World o' Commerce as FB. No skin off my nose, then, that on Friday, as the LA Times put it, Facebook stock stumbles in big public debut:
Facebook Inc. shares got off to a rocky start in what has been the most highly anticipated initial public offering in history.

The stock jumped more than 10% in the first few minutes of trading. But then sellers swept into the market and that gain evaporated.

"It's a total disaster because the stock is trading right at the IPO price," said Francis Gaskins, editor of IPOdesktop.com in Marina del Rey. "They didn’t want that in a million years. A traditional IPO is up 10% or 15%."
Okay, maybe Mr. Gaskins was a little excited. A total disaster? Bloomberg's article on Friday's stock market topic of the month was Zuckerberg Up $100 Million As Facebook Debut Stalls.

Mark Zuckerberg remains one of the 30 richest people on Earth after shares of Facebook Inc. (FB), the world’s most popular social networking company, hovered near the initial public offering price in its trading debut.

The Facebook IPO was not a disaster for Mr. Zuckerberg, though if I were him I wouldn't spend a lot of time trying to squeeze through the eyes of any needles.

So why didn't FB go through the roof last week after it opened at $38 per share, the price Zuckerberg and company determined in advance of listing the stock on NASDAQ? Perhaps investors concerned that its CEO is half the age of the average S&P 500 CEO, as AP's technology writer Barbara Ortutay asked on Monday of last week: Facebook CEO Mark Zuckerberg turned 28 Monday: Does age matter? Is it that Facebook Users Don't Trust Site on Privacy Issues, as Ian Paul of PC World reported on Tuesday? Or do investors share the opinion of Espen Robak of Pluris Valuation Advisors, quoted in a headline on The Atlantic's web site on Friday: 'If Facebook's Profit Model Stays the Same, This Valuation Doesn't Make Any Sense.'

Hmmm... I'm not much of an investor myself. On the rare occasions I've prepared to buy a few shares of stock, members of my own family have begged for advance notice so they can sell short. With that disclaimer, I'll declare I have no intention of ever buying shares of Facebook stock.

Why not?

Because it's only a matter of time -- and probably not much time -- before Facebook becomes the next MySpace. Between uncertainties like those brought to public attention by writers for AP, PC World, and The Atlantic, and the ephemeral nature of 'cool', I don't see a lot of upside when it comes to Facebook, looking from the perspective of day traders or of long-term investors.

Will it be quick or easy to dislodge Facebook from its dominant position in social media space? I strongly doubt it. Have you checked your Google+ feed lately? Probably not, and to note that the staff over in Larry and Sergi's shop are smart and well-funded would be something of an understatement. But it ain't over 'til it's over, and for all we know the next big social media thing may be an app that hasn't been invented yet.

Facebook is valuable today because it's where 900 million people hang out. Eventually, if not sooner, whiling away the hours in the ho-hum social space where everybody else is jammed in with you is not going to be cool.

That's how trends work.

I check Facebook at least an order of magnitude more frequently than I check Google+. That's this week. Next week? I'm not placing any bets.

Are you?


Related posts on One Finger Typing:
Social media as author platform
Google signals its next social media move
Google yanks APIs, developers caught with pants around ankles


2 comments:

  1. I agree that the valuation of FB doesn't make sense - I think think there's a strong tech bubble element to its value. Above and beyond that, though, I strongly agree with what you said about FB eventually just falling into disuse, and I think it's more likely to fall to a new model rather than adapting and becoming the new model. Whatever the next Social Media wave is (if I could properly predict it I'd be the next billionaire) it'll wash out FB over time.

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  2. It's hard to finalize, what to expect from Facebook.. As each day Facebook stock market have a different view.

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