Back on 3 May, I published Will Facebook’s IPO meet expectations? Seems like it did and then it didn’t.
The price climbed from its opening of $38 on Friday to $42 before falling back to just above the opening price at the end of the first day’s trading, it did meet expectations in that respect.
Then it fell for 2 consecutive days after the weekend so it didn’t maintain those expectations. As of late Tuesday afternoon, the price is $31.00 a fall of almost 9% for the day, with many analysts suggesting it will find support at $30.
My crystal ball was no better than any one else’s. I had no special knowledge, no great insight, just a gut feel that there was too much hype around a company which has as its biggest asset, a tenuous hold on 900 million users who could depart in droves when the next new social media site becomes more fashionable. Add to that an increase in the number of people experiencing “social media burnout” and either cutting back the hours spent on social media, reducing the number of platforms they are active on – or both.
The debate on who is to “blame” for the share price to slip below its initial offering of $38 by about 10% yesterday and a further 8.9% today. The investment bankers seem to be winning the prize for nomination as the chief culprits today according to the tweets and blog posts. There are suddenly a lot of experts with theories for the disappointing performance, just as there were any number of experts commenting on Friday that the rise in price on the first morning of trading to $42 was entirely expected and showed what a good job the investment bankers had done in advising the Facebook owners on the optimum IPO price.
Perhaps we should take a moment to wonder how Mark Zuckerburg is feeling this week, imagine having to tell your new bride that your net worth has dropped by a couple of billion within a few days of getting married.
It is going to be interesting to see what the Facebook share price does over the next few weeks. But its IPO performance is a sharp reminder that style (and hype) does not always trump substance.
Social media is still evolving, the major players of next year might not even be on the horizon yet, some of today’s high flyers might be gone by then.
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Wishing you success in all your endeavours