Zombie Apocalypse for Facebook Stock as Prices Drop
Facebook Stock Facing Zombie Apocalypse of Lawsuits and Drops in Value of FB Share Prices?
NEW YORK, NY - Facing a seeming zombie apocalypse, Facebook stock prices hit an all time low on the market today. FB Stock prices dipped to $26.57 at the start of trading Monday, down from Friday's close of $27.72 per share. News of stock prices not anywhere near the $45/share some were predicting and still below the opening price of $38/share at the Facebook IPO are not the only concerns the social network company is facing.
In the last few weeks, it has come out that Facebook is being sued - at least twice. Whether it is the Facebook IPO fiasco or FB privacy concerns, a lot of people are coming forward to say they are not happy with the behemoth social network. And users are not the only ones. Just prior to the IPO, GM announced they were stopping $10 million of advertising on Facebook.
This may be a "drop in the bucket" for a company that brought in just shy of $4 billion in revenue in 2011, it may be a sign of a wider problem Facebook is going to be facing. Some have reported that Facebook may not be as worth as much as $100 billion (roughly the same as Amazon.com) and many, many times the annual revenue of the relatively new social network company.
Over at the San Francisco Gate, they have an interesting piece comparing Google and Facebook's revenue models when it comes to advertising.
In our newsroom, someone threw out a good analogy for Facebook's ad business*: It's like you're at a party, standing around, talking to your friends, and someone made the posters on the wall advertisements. Maybe you'll look at them, but they're not really what you're there to do.
Google, on the other hand, is like you're walking through a grocery store looking for whatever you need and the advertiser gets to jump in at the last second and offer you what you're looking for [SIC].
So whether it is zombie investors or zombie users of the giant social network, there are many signs that a zombie apocalypse will be the downfall of this company. While it may be remembered for years and years to come as a company that shook things up, they may have become too big not to fail.
Last month, Facebook Chief Operating Officer Sheryl Sandberg asked Harvard students to be sure to click on Facebook ads. While it may be in jest, some are not sure it was appropriate behavior.
Sandberg, who visited her alma mater with her parents and two children, only once made reference to the IPO in her speech. After urging the graduates to use Facebook to stay in touch, she said: "We're public now, so could you please click on an ad or two while you're there."
Facebook has been struggling with making money from people adding status updates from their phone instead of via the website on a laptop, netbook or tablet computer. There are also some fears that game developers like Zynga may bypass Facebook on the smartphone to keep more of the revenue for themselves.
PC Magazine wrote:
Furthermore, as The Wall Street Journal points out, Facebook receives a disproportionate amount of revenue from Zynga and other game developers. That works just fine on the desktop. But on smartphones and tablets, Facebook hasn't yet managed to create a platform that will lure those developers into essentially residing within Facebook, rather than writing their own apps for iOS and Android and keeping all the revenue. One does not launch Facebook's mobile app to play games like "Mafia Wars," and it looks like this won't be the case for several years.
This may be why Facebook is working so hard to get into the mobile market with a possible Facebook phone on the horizon in 2013.