The Messy Facebook IPO

There has been a lot going on with Facebook, and up until now I chose not to write about it. Those who know me know I’m a big supporter of the social network – and despite the recent messiness of a “failed” IPO, numerous apps being released, rumors about them purchasing Opera, and even more rumors that they are trying to build their own smartphone, I still see their vision as being true to what it has always been.

The Facebook IPO

So many of the headlines I’ve seen over the past week read something along the lines of “Facebook IPO Fail”. To an extent, I agree – but for the most part, I do believe Facebook did what they set out to with this IPO. If we go back in time a few years, you will realize that Google had just as many problems with it’s IPO as Facebook has over the past few weeks. In 2004, many people thought that the public offering of the Goog’s would change the tech landscape forever. Let’s compare the two shall we?

The Facebook-IPO-Build-Up was Over Hyped:

Facebook’s shares have somewhat settled close to $31, close to the range it first indicated for the stock a couple of weeks ago. Considering how much Facebook raised in this extravaganza (a whopping $16 billion, and possibly more to come), why is everyone saying this is a fail? Well in context of a $38 IPO price – it’s crystal clear that investors overbid  in the beginning expecting that they would get bailed out when trading began. All this to be said that Facebook looks bad once the dust settled and didn’t live up to the hype it had accumulated.

At the Time, Google’s IPO was Deemed a Failure

The question is, will all this really matter in a matter of months, years? It will certainly be a stain on their Wall St. reputation, but let’s think back to August 2004 when Google’s IPO was seen in the same light. It’s early investors actually reduced the numbers of shares they were selling as the price failed to reach their expectations. I encourage you to read more about the Google “flop” in this article from Forbes.

So Much Doubt

There have been many who’ve said that Facebook is in trouble. They’re doomed to fail throughout all of this – and shady practices in their revenue revisions show that the integrity of the company is not there. GM pulling $10 Million in advertising  must prove that Facebook Advertising doesn’t work.  While all of this is true, I do believe it’s a bump in the beginning of a long road. Display advertising as a whole has advertisers screaming for a consumers attention – banner blindness is on the rise. It is up to the advertiser to come up with creative ways (and products for that matter) to drive revenue and acquisition. I think Facebook will figure out the right formula for advertising soon, and they are close – but for the most part, advertisers need to consider their performance and methods before blaming the platform.

There is so much legal and financial mumbo-jumbo in the IPO game that I don’t understand (nor do I really want to) – but I believe Facebook will take a very similar path as Google. Creating a social layer over the web that connects people with their friends and allows them to share their experiences, but Google has an experience advantage that Facebook doesn’t have just yet, and they had to fight through an “IPO failure” as well.

As for the rest of the rumors; phones, browsers, etc. I think that Facebook is being aggressive at the moment. But you must consider that they need to play aggressive right now – their biggest risk is mobile, and the only real way to close that gap is to create an OS. But more on that in a later post…

What are your thoughts on the IPO?

-m.

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4 comments

  1. Abiel Abuy · May 28, 2012

    Hmm…. IPO is a very very complicated game… that’s why facebook is not focusing on the stock market.. instead they’re focusing more on what they do best… and I’m sure everything else will follow.

  2. Pingback: Facebook: The Collective Hallucination | Monday Note « Ye Olde Soapbox
  3. Pingback: No There There: What Went Wrong with the Facebook IPO - Experts Exchange Random Thought
  4. Pingback: No There There: What Went Wrong with the Facebook IPO - Experts Exchange Random Thought

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