Analysing Facebook's IPO one year on
A year has passed since Facebook first floated itself on the stock market; but what has the tale been for the social giant since then?
Mark Zuckerberg’s less-than-official attire of hoodie and jeans when pitching Facebook to Wall Street investors got the backs up of the banking fraternity, yet the Palo Alto firm was subsequently valued at $104bn (£66bn), at approximately $38 (£24) a share.
There was certainly worry in terms of what this meant for the social site. With an ethos proudly stating “it’s free and always will be” on the sign-up page, analysts worried that, now the company had shareholders looking on, the company would have to be more aggressive and evident in its monetisation policy.
This may not be too far from the truth. Last month, Facebook began trials of a paid message service – ostensibly designed to eliminate spammers – forcing users to cough up if they wanted to message someone not in their friends list.
Facebook’s biggest revenue streams, traditionally, had always come from targeted ads to users. But was this going to be enough? With a huge user base and mind-boggling amounts of engagement and data collected, the potential was certainly there, albeit having to play a high-wire balancing act in order to maintain engagement whilst pushing forward the revenue numbers.
During the 12 months since the IPO, there have been various innovations from the Palo Alto giant, predominantly designed to exploit the mobile space.
From introducing mobile-only ads in June, to the purchase of Instagram in September and the widely-publicised Facebook Home in April, the message was clear: make it visual, and make it mobile. And this seems to have paid dividends; 30% of Facebook’s ad revenue in the last quarter came from mobile, as opposed to 23% and 14% in the quarters before that.
But even a year on, people are quick to criticise. Rupert Murdoch, former owner of MySpace, tweeted in what could be described as ‘doing a Ratner’: “Look out Facebook! Hours spent participating per member dropping seriously. First really bad sign as seen by crappy MySpace years ago.”
With shares currently trading at $26 each, the market doesn’t appear to be hugely confident that Facebook can recover from and improve on its IPO. As Michael Pachter, Wedbush analyst told MarketWatch: “Facebook’s share price is telling you that investors are more sceptical about the company’s prospects than a year ago.”
Yet there’s also a prevailing sense of anticipation; that this is just the beginning. As Harry McCracken wrote for TIME: “Decades from now...I’ll be astonished if anyone remembers [Zuckerberg] principally as that guy whose IPO didn’t live up to expectations.”
But what do you think? Marin Software, who is currently launching a Facebook Campaign Wizard in order to ensure brands avoid Facebook ‘blindness’ in their campaigns, has put together an infographic detailing Facebook’s movements in the past 12 months. Take a look at the graphic below (click to enlarge):
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