[ANALYSIS] The Root Cause of Facebook’s IPO Flop
The dust is settling after a hectic and disappointing few days for Facebook and company. What the heck happened? Brokers are pointing fingers at NASDAQ, Facebook lost over $10 billion in value, and many amateur investors are shaking their heads.
Everyone is too focused on the events, rather than the lifestyle of Facebook, if you will. Pundits are musing about flooded shares with sparse demand mixed with unrealistic expectations. Those expectations are a great starting point — for us to zoom out a bit.
What REAL value does Facebook provide investors and public? Please indulge in the comments, whatever ideas you have. From my perspective, Facebook is similar to Groupon, similar to Zynga. All these companies are purveyors of virtual goods or services. Compared to energy companies, consumer packaged goods (CPGs), even real tech companies like Apple and Google, Facebook has little tangible value it can proffer to the public.
Let me be clear, there are great things happening in design, engineering, research, and advertising at Facebook. I don’t mean to detract from tons of great people there. However, Facebook has only created perceived needs of its service. Until it can connect consistent, tangible, and legitimate benefits with the platform, it will remain irrelevant as many other startups.
Is there promise to fuse the ideas of TED with the action of e-commerce and urgency of video communication (Skype, etc.)?
However, Facebook simply has not reached that point yet. Until they do, it will be tough to take Zuckerburg and crew seriously as a publicly traded company.
Photo Credit: Flickr richmerrituga