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On 1st July 2012, Facebook executives agreed to continue listing its stock on the NASDAQ exchange, despite struggling significantly since its IPO.
In the first six weeks of public trading, Facebook’s share price (NASDAQ: FB) has dropped 19.02% with the company privately blaming NASDAQ for technical errors on the day of the IPO, as well as other mishandlings since then.
However, many investors credit Facebook’s struggles to the huge number of shares and high stock price at the time of the IPO.
Additionally, Facebook has had numerous issues since the IPO. Namely, investors are concerned with the company’s ability to generate revenue from its mobile website, which represents a huge portion of its users.
Initially, Mark Zuckerberg and other Facebook executives denied the emerging importance of the mobile site. Now, there is an obviously growing trend in that direction and Facebook is trying to catch up. One issue with the mobile application is incorporating advertisements without sacrificing speed and functionality.
Another is the compatibility of Facebook’s new format, Timeline, on a much smaller screen.
They have experienced some setbacks in their work. First, they created a new application that would allow users to see who else was using Facebook near them as well as add friends on Facebook as they meet them in person. Within a week, this feature was eliminated as Facebook says it was merely a test, rather than a formal release.
Next, Facebook faced scrutiny after many users’ contact information was unknowingly changed on their profiles as well as their friends’ contact lists. This error, caused by a bug spread through its mobile application, created problems with many users not receiving all of their emails.
These mishaps have weakened confidence in the company’s engineers and any forthcoming applications.
Whilst Facebook has faced several issues in its first weeks as a publicly traded company, there are some signs of improvement. The company recently named its COO, Sheryl Sandberg, to its board of directors.
Prior to Facebook, Sandberg was vice president of Global Online Sales and Operations at Google, where she built and managed the online sales channels for advertising and publishing and operations for consumer products worldwide. She has also served as Chief of Staff for the United States Treasury Department under President Bill Clinton and began her career as an economist with the World Bank.
Placing an established and respected individual on the board will hopefully improve investors’ confidence in the company and establish some credibility for its executives.
When this move was announced, Mark Zuckerberg said, “her understanding of our mission and long-term opportunity, and her experience both at Facebook and on public company boards makes her a natural fit for our board.”
Furthermore, Facebook just announced that it will release its quarterly earnings on 26 July 2012. As this is the first quarter that Facebook stock has been publicly traded, this report will be a major indicator of the company’s profitability.
While it may not have huge earnings at the moment, beating investors’ expectations would have to be considered a success, bearing in mind all the struggles the young company has already faced.
The Facebook iPhone app is very poorly rated, only 2 stars in the app store. In fact, the first review you come to sums it up pretty well, “Dreadful! Excruciatingly slow. Really poor app in general. Save yourself the time and just get Twitter!!!!!!!”.
It will be an interesting few months watching FB, as more users pile into the increasingly unreliable app.
How will they monetise something more and more users are becoming frustrated with? Slapping ads on a low quality app is unlikely to go down well with the userbase. Unless Facebook can up their game and provide much needed functionality and reliability improvements they will likely face stiff resistance to advertising.