They valued the firm at $104billion, despite numerous questions still being asked about the company’s true ability to offer an ongoing return to investors. When it hit the stock market last week a flurry of activity ensued, with 89million individual shares making this the largest volume of transactions for a business debut, though some analysts warned this was still too good to be true. Yesterday those voices were proved to be, at least in part, pretty accurate.
It may have been the apparent technical problems at the second largest stock market in the US, the Nasdaq, which meant that brokers were left in the dark as to whether transactions in Facebook shares had been completed. Or it may have been a sharp case of reality biting back as scores of potential investors suddenly faced up to the fact that they weren’t sure exactly what the business model was, fearful of making another dotcom mistake. Either way trading ended yesterday with each share valued at $34.03, a loss of some $3.97 per unit.
Interestingly this comes at a time when reports of financial difficulties at Yahoo have been circulating, and though a recent multi-billion dollar investment will no doubt have helped things there the point is that if we skip back a decade or so the now all-but forgotten search engine was one of the latest web-based darlings- in short, things change quickly when it comes to online ventures. Of course there’s a lot more to Facebook than search engines in terms of advertising potential and user loyalty, and whilst we have Google, Ask, Lycos and the like all trying to point us in the right direction online there is only one website that behaves and offers the same services as Facebook.
Apparently former Wall Street analyst Henry Blodget told The Guardian he reckons Facebook shares to be worth between $16 and $24 each, which would halve the company’s overall value to a still-rather-impressive $50billion (give or take). That’s quite a difference, and with experts like this sitting in the naysayer’s camp it’s not hard to see why so many people seem to have been spooked. And this is before you mention the fact that, regardless of actual stock, Zuckerberg will retain control over the company- a decision that’s usually met with scepticism at best, if not frustration on the part of shareholders. If nothing else this is a pretty interesting situation as it represents perhaps the first failing of the social media giant since its inception, though we’ll have to see if it can’t recover the losses incurred in what’s been a damaging two days for its business reputation.