Facebook’s IPO hangover

Wow!  What a difference a week makes (actually, it’s been closer to 2 weeks, but who’s counting).

INVESTORS ARE! 

Well, at least they’re betting and they’re betting that Facebook’s value will continue to fall. See the article in today’s WSJ lead story, “Investors Bet on Facebook Fall.”

The numbers are rather sobering.

When the IPO closed on May 18, Facebook was valued at $104 billion. Now – $79 billion. That’s a decline of 24 percent. Trading closed yesterday at $28.84 per Facebook share, down from slightly over $38 per share.

At the end of May 18, Mark Zuckerberg’s stake in the company he founded was pegged at $19.1 billion. Now – a mere $14.5 billion.  I guess losing $4.6 billion on paper in 11 days is still a loss. 

This is all interesting, but not really of interest to those of us who are really wondering what it all means for the behemoth of social media.

As I shared in my post of May 22, I am no technology or financial expert. I also shared that there is more that we don’t know than there is that we know.

Here’s what I said I knew last week. Little has changed except the pressure is even higher now than then.

• Going public mandates accountability to shareholders (investors) … a whole new form of continuous pressure to generate profit. And, this pressure builds quarterly.
• In order to realize a profit, Facebook has to generate more revenue more consistently than ever before.
• To do this, there will be changes in the Facebook model that we now know to an operating model with more potential to generate revenue and, thus, profits.

Here’s what I said I really didn’t know last week. Nothing has changed with 11 days of stock value losses.

• How will the changes that must come to Facebook affect me and, as the owner of a strategic communications consulting firm, what we do for our clients?
• Will the changes that must come add a consistency and predictability to Facebook as a valuable tool for growing market share (if so, this will be welcomed)?
• Will the pressure to generate revenue and profits make Facebook just another overcrowded channel for advertisers, albeit a really big one?
• Will Facebook’s appeal to individuals’ sharing information be less, making it less appealing to businesses who also want to reach the more than 900 million users?

Again, things will change for all of us Facebook users. Increased pressure resulting from reduced stock value simply makes Facebook changes about as inevitable as the day after headache, blurred vision and vague recollections of a really great night.