For the past eight years, Facebook has been the master of its domain.
Led by Mark Zuckerberg, Facebook has created its own rules of engagement, shrugged off a series of strategic and tactical mistakes, and, in the process, attracted more than 900 million users.
Despite Facebook’s success and status as the world’s largest and, arguably, most powerful social network, there are dark clouds on the horizon as it prepares for a much-anticipated IPO.
With Facebook having to disclose its financial results, there are a growing number of analysts and investors scrutinizing the books to get a better handle on Facebook the business as opposed to Facebook the social network behemoth.
What they’re discovering is cracks in the armour. While Facebook continues to add more users, the business is not firing on all cylinders. First-quarter revenue was flat compared with the fourth-quarter, and there are growing concerns Facebook is having a difficult time monetizing its mobile operations.
There are also more focus on Zuckerberg, and whether he has the chops to be the CEO of a $4-billion business with a market cap of close to $100-billion. Unlike many young entrepreneurs who give up the reins to a more experienced executive, Zuckerberg has stuck around as the top gun, while maintaining his controlling stake.
As well, Facebook’s IPO roadshow is not going smoothly. According to The Next Web, Facebook shelved a 30-minute promotional video during a stop in Boston after it had been panned at a presentation in New York. Even more significant is that Zuckerberg was a no-show in Boston, leaving COO Sheryl Sandberg to meet with analysts and investors.
In many respects, it would be easy to suggest the good times are over for Facebook. As a publicly-traded company, every single move will be examined, poked and analyzed. It means Facebook will no longer by Zuckerberg’s personal sandbox because if he makes any mistakes, the stock could be savaged by fickle investors.
At the same time, Facebook will be under increasing pressure to maintain its financial growth. While more subscribers is obviously a positive thing, investors and analysts want to see higher revenue and profits. It explains why Facebook is scrambling to figure out how to better monetize its mobile operations, which included the staggering $1-billion purchase of Instagram.
As a publicly-traded company, it’s a whole new world for Facebook with new challenges and sky-high expectations. While the company has been a social media superstar, its success will be judged in an entirely new way.
Tags: facebook, IPO, mark zuckerberg
It doesn’t surprise me to learn that Facebook’s numbers are not reliable; they seemed a bit difficult to believe even for someone like me who doesn’t have an “eye” for what one should expect from a company like this. I believe you’re right that things are going to change.
I still see a lot of optimistic people out there, though. I would strongly recommend that anyone who is thinking about investing in Facebook should do some research first. Research information on Facebook is available at http://www.ipoboutique.com for those who are interested.
Gwen: Thanks for the insight, comment and link. It will be interesting to see Facebook’s financial performance and how its product development strategy is impacted by the need to drive more revenue. Mark
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