With all the ‘friends’ that Facebook has, its IPO was still lackluster. The stock which opened at $42.05 closed at $38.23, up just $.23 from its IPO price. Despite record volumes that traded more than 500 million shares throughout the trading day, Facebook’s share price remained impotent.
Facebook is beloved by over 900 million users and is deemed to be one of the coolest companies on the planet. It is therefore surprising that Facebook was unable to convert this endearment into market momentum.
As it currently stands, Facebook from an investment standpoint isn’t very compelling. The IPO price of Facebook was more than 105 times earnings and 25 times revenues. This means that Facebook will need to increase its sales and earnings in order to grow into its valuation and Facebook investors will likely have to wait several years for the company to grow up and for their investment to become profitable.
Facebook CEO Mark Zuckerberg could also use some maturing. Zuckerberg’s decision to wear his signature hoodie during the investor roadshows displayed a lack of respect and made a statement that wreaked arrogance. It also reminded us all, that he is still just a kid and needs to grow up.