Mark Zuckerberg may not be Macaulay Culkin, but he sure is Home Alone.
Since Facebook went public about one year ago on May 18, 2012, its stock has lost a third of its value. And that’s in a rip-roaring bull market!
Yes, it was the most botched initial public offering of all time, thanks to its bankers and Nasdaq, but the company hasn’t done much to help itself now that it’s public.
The wildly overvalued IPO never really had much of a chance of being “Liked” by investors. Sure, everyone knew of Facebook, but most really didn’t know what they were buying, besides a p.r. road show with a perpetually hooded CEO, who for such a shy person always just managed to sneak into a camera shot.
It’s hard to make “Friends” when Nasdaq, an exchange that prides itself on featuring high-tech companies, can’t even let buyers or sellers know if their orders were completed due to — get this — “technological issues” on the very first day of trading.
Nevertheless, the buck stops with Zuckerberg and his team.
It’s not as though the Facebook team is inflexible. After all, the company did go public after Zuckerberg had sworn it wouldn’t only six months earlier. It even rolled out a Facebook phone, called “HTC First,” in order to boost its presence in the fast-growing mobile social media market, after pooh-poohing the idea on the road show and at a Silicon Valley conference.
But the Facebook phone is one unliked product. AT&T sold just 15,000 in the first month and ultimately dropped it.
Zuckerberg and his team clearly need to take Facebook into new product directions, to lead consumers to things we never imagined we needed. That’s what innovators do.
And innovation happens faster now than ever; other entrepreneurs have been creating and delivering at light-speed rates.
Jack Dorsey did it with Twitter and now again with Foursquare; Steve Jobs did it with the Mac, the iPod, the iPhone and the iPad; Sergey Brin did it with Google, Android and Google +.
Point is, the Zuck has some big shoes to fill and a very big market cap to grow up into. But Sheryl Sandberg at the D: All Things Digital conference last week told the audience that kids are spending more time on Twitter and Tumblr.
Kids don’t think it’s cool when their parents are using the same sites as they are, so it’s not a good sign that Zuck’s is now termed “Mombook.” And although Sandberg claimed that “it’s not a zero-sum game,” she’s wrong.
Facebook is not a bad company. It did have $1.5 billion in revenue and a $219 million profit last quarter. The problem is, it has a $62 billion market cap, down from about $100 billion at the IPO. In comparison, the IPO two years ago of the work-oriented social-media network LinkedIn came in at $45 per share; today it’s $170.
It’s all about execution. Strong new technology companies always carry expensive investment multiples, but they are also expected to deliver knock-your-socks-off growth and gee-whiz products.
Young billionaires don’t always make great public-company CEOs; Groupon’s Andrew Mason was ousted from the company he founded. In contrast, look at the success Google has had by bringing in Eric Schmidt to be the adult in the room.
Going public started off on the wrong foot for Facebook investors, and it hasn’t gotten much better since. It’s time to see what’s under the hoodie!