We recently witnessed the highest tech IPO in history, but did Facebook’s début on the stock exchange live up to its hype?
Media buzz started picking up in early May, when Mark Zuckerberg ran several pre-IPO road shows. And while his choice of clothing seemed to draw more attention than the IPO itself, overall sentiment was neutral to positive. Days before the $16 billion IPO however, the media’s tone changed when analysts reduced the revenue forecast and issued warnings of long-term risks to investors. GM cancelling its $10 million marketing contract added further fuel to the fire as the social network’s ability to deliver a tangible return for advertisers was put under the microscope.
On the day itself, “not enough investors hit the “Like” button on Facebook’s IPO” (Yahoo! Finance), and by the second day when shares sank to end 10% below IPO price, investors’ dislike became even more apparent. But did this have any impact on the 901 million Facebook users worldwide? Has anyone actually closed their account? Forbes doesn’t think so, and says Facebook “is still a golden child”.
The battle between Facebook and Google continues, with advertising strategy being a major factor as to who comes out top. Not all media outlets dismissed Facebook as an advertising partner following the GM fiasco. CNet quoted adaptation to mobile usage as one area of improvement whilst praising Facebook’s effectiveness when it comes to building brands and running social campaigns.
But let’s go back to the beginnings. Set up by Zuckerberg “to accomplish a social mission – to make the world more open and connected”, Facebook was not originally created to be a company. This people-first approach was picked up by the media in contrast to Steve Jobs’ product-first philosophy. A few years ago Zuckerberg was still handing out business cards that read “I’m CEO, b*tch”, while today, Michael Pachter, among others, is questioning the 28-year-old’s suitability for the Wall Street game: “I’m not sure he’s the right guy to run a corporation”.
Hoodie or no hoodie, the start-up’s soaring success is undeniable, with one in every seven minutes online now spent on Facebook. Whilst latest developments and investigations into Morgan Stanley’s role in the IPO are casting yet another shadow on the event, it’s business as usual on the actual networking site. Or is it? The full impact of investors on Facebook remains yet to be seen, however the main challenge – as outlined by India’s Moneycontrol - will be “to strike that important balance between keeping users engaged without charging them, and yet generating revenue for the company and its investors”. Forbes, one of the most active media sources in relation to the IPO (40% of all coverage came from US sources), remains optimistic and distinguishes between Facebook and its IPO – “Snicker all you want at the Facebook IPO, but don’t write off Facebook, the social network.”