Facebook has finally hit the stock exchange, with an estimated value between $93 and $104bn, several weeks after the IPO was announced. Due to high demand of Facebook shares days before it went public, the big F took the decision to raise its value from $28 to $35 per share, with total estimated value breaking the $100bn wall. Furthermore, the social network has also decided to issue 25% more shares with the aim of capitalising the excess of demand from investors. This makes Facebook worth more than some giants on the Nasdaq, such as Amazon.com, Kraft and Disney.
During the weeks that preceded Facebook’s IPO, founder Mark Zuckerberg spent most of his time rallying around the US in an attempt to placate criticism from some analysts and traders in the stock market. Part of the criticism derived from the unprofessional outfits that Zuckerberg has shown at Wall Street, causing a viral campaign on the web, ‘hoodie gate’, which has seen many conservative bankers and investors battling against the rampant hoodie generation. Besides ‘hoodie gate’, some analysts have focused their attention on Facebook’s inability to generate a high volume of revenue from advertising activities: quarter on quarter advertising revenue growth was only 6.6%, much lower than in June 2009, when the quarter on quarter growth was over 20%.
General Motors’ announcement that it will stop advertising on Facebook has helped to fuel uncertainty among some investors who realise that, if a big step towards more profitable advertising activities is not made, it will be hard to see Facebook overcoming scepticism and show some strength. This idea is supported by the fact that, considering that Facebook has already over 900 million users registered, unless it manages to enter China and have a stronger presence in Russia, it will be hard to see the number of users grow at the same pace that has characterised the recent years.
Regardless of these figures, which could be interpreted as the first signs of some kind of stagnation after 8 years of unstoppable growth, the stock market is far from showing fears, hoping to capitalise from the investment in Facebook shares.