What Can We Learn A Year After The Facebook IPO?
Facebook just celebrated the one year anniversary of its IPO on May 18, 2012. The initial public offering was fraught with missteps and many argue the price was too high. The demand was much lower than anticipated and Facebook shares took a pummeling since investors have never been happy with the asset from day one.
Facebook has made significant changes since the IPO. The company gets a larger amount of traffic from mobile devices and the social media site is advertising heavily on desktop versions. Open up your Facebook newsfeed and you are bound to see an advertisement before any updates from your friends. This is leading to reduced time on site, increased clutter and a decrease in ‘connectedness’ which was Facebook’s key traffic driver. New user growth cannot continue at the exponential rates from a few years ago but mobile advertising growth won’t decline for a couple of years. Mobile revenue for the first three months of 2013 was up 30 percent.
Regardless, Facebook’s stock chart still looks dismal without forming a bottom yet as more and more investors feel the heat of a declining price. Can Facebook make a comeback? It depends. If the major indices have risen such as the S&P 500 and the NASDAQ, yet Facebook is on the decline, that’s telling.
Looking at a chart of FB from December 2012 (without IPO noise) to May 2013 shows a clear break in sentiment. Could FB be going much lower and be the new SIRI?