Three days into trading as a public company it is time to take a look at one of the most anticipated IPO’s the world has ever seen. To summarize it right at the beginning, it was and is a huge mess and it is not very short of an embarrassment for those involved.
Let’s not waste to much time on the technical issues, even though it is fair to say that NASDAQ didn’t convince the world with their performance. However, that doesn’t increase the value of Facebook and its current capabilities. While over the past weeks and before the IPO there was a huge hype about Facebook, besides of the fact that they went public there is really not much to be enthusiastic about. That counts for the short and mid term. What happens in the long term, 2 to 5 years, nobody knows. As it turned out, this wasn’t unknown by the underwriters of the IPO, Morgan Stanley, JP Morgan Chase and Goldman, who had information about downward revenue correction for the rest of the year. That the information wasn’t published during the entire hype has the easy reason that they all wanted to make their money. This seems not to be a problem with the current regulations, but this is an entire different problem.
Sure the circulating number of 900 million users is enormous, but honestly, I don’t buy into that. In my opinion that is in no way the number of single active users. I just don’t believe it. I believe that this number includes double and triple profiles and a huge number of inactive users. I would even go so far and claim that at least two thirds of that huge user number is absolutely useless for Facebook’s business model. In other words, the majority of users is not at all interested in advertising on the platform or has no technical ability to see the ads. Continue reading