Author’s disclaimer: The author of this article is not a financial advisor and does not provide recommendations on investment strategy. Before deciding on any investment opportunity, seek out a professional advisor whom you have thoroughly researched.
This has been a hype-filled month for Mark Zuckerberg, co-founder of Facebook, and the Facebook team. One of his early investors renounced American citizenship saving himself millions of dollars in taxes, Facebook finally went public, acquired a mobile app company, and the millennial hero, Mark Zuckerberg, got hitched. Congrats, Mark and Priscilla!
After much anticipation and hype surrounding the Facebook IPO, Zuckerberg was on hand Friday to ring the proverbial opening bell for the Nasdaq exchange. A technical glitch raised eyebrows when Nasdaq OMX Group Inc. (NDAQ) failed to initiate trade messages. The glitch was fixed and the trading day began with a quick uptick, then settled $0.41 above the IPO price. Is this a sign that the Facebook bubble is ready to burst? Or, is a signal of the broader financial uncertainty that Facebook simply cannot fix?
As PolicyMic Pundit, Sal Bammarito points out in his article, the SEC clearly outlined the risks involved in investing in Facebook. Their success is based on the ability to continue to add new users. Even though Facebook has reached phenomenal growth in this area, the question remains if they can sustain this growth and remain number one? Or, have they taken the lessons learned from MySpace founder Tom Anderson to ensure long-term sustainability and domination in social media?
Another area of weakness is that their advertising solution offering/delivery method is limited in scope and their current mobile application solutions fail to make up for the lost visibility to advertisers. This has caused numerous major advertisers, like GM and JC Penney to drop their Facebook storefront from their ad strategy portfolio and seek alternative methods for market security and new market penetration.
Economic factors aside, the biggest challenge Facebook has yet to define and overcome is the ability to balance shareholder expectations with Facebook’s stakeholder mission. During his debut, Zuckerbeg reminded Nasdaq of Facebook's mission when he stated, “But here’s the thing: Our mission isn’t to be a public company. Our mission is to make the world more open and connected.” It’s that sole mission that stopped the Yahoo acquisition of Facebook in 2006 and could create the same contentious board relationship Steve Job experienced during Apple’s early days.
Yet, as all of the speculation and buzz surrounding Facebook continues, Zuckerberg continues to show his venture capital chops with the acquisition of mea-commerce (mobile enterprise application commerce) vendor Karma on the same day as his IPO. This strategic acquisition brings two seasoned and successful visionaries to Facebook’s talent portfolio with experience in product delivery from their relationships with Google and Microsoft.
The success of Facebook’s offering has yet to be seen. The one certainty in Facebook’s IPO is not even that hype can steady the market waters given the potential economic headwinds coming up. As Zuckerberg reminded his employees/newly minted millionaires, now is the time to “stay focused.”