The Facebook IPO-Got Your Checkbook?

Mark Zuckerburg is sauntering down Wall Street in his hoodie causing money pundits to scoff and harrumph at his lack of maturity for not wearing a suit. As if they could suffer him better if he was as bound and uncomfortable as they are. Maybe when faced by a punk of 27 who could be worth $17 or 18 billion when the IPO hits they just got jealous. I know I am.

The IPO is valuing itself at $96 billion surpassing Google whose 2004 IPO valued the company at $23 billion and is now worth $200 billion.  Did you know that if you laid a billion dollars end to end that someone would invariably want to be your friend?

So is Facebook really worth the hype? Are investors being smart by hitching their wagon to a company that “seems” worth it? After all, it does have 900 million people trolling around the site. But its revenue has fallen 6% from the previous three months.

Advertising naturally is the moneymaker for the FB (its ticker handle) but what value are advertisers truly getting? Company fan pages are free and engage customers and potential customers on a daily basis. The tiny ads in the margins can sometimes go unnoticed. And bogus ads offering $1000 gift cards or celebrities used as flycatchers to increase CTR may be causing some ad fatigue.

“The bigger issue [with Facebook] is the core business,” said Morningstar analyst Rick Summer. “There’s still no good understanding for what advertisers are paying for.”

And then there’s mobile which Facebook just can’t seem to master. Its monthly averages users on mobile exceeds desktop users but yet ad revenue from mobile is itty bitty. The interface is terrible and if you think the ads are small on your laptop anyone over 40 can’t even see them on an iPhone. This conundrum has apparently even caused Facebook to amend its S-1 (a SEC filing for public companies) stating that the lack of mobile ad revenue is contributing to the overall weak advertising numbers.

Mr. Z will continue to dress like a rich hobo as well as control 58% of the company’s voting power meaning he’ll have final say over the company’s direction even after it goes public. This is the same guy who bought Instagram for a cool $1B without notifying the board of directors who found out about it the same day my mom did. What’s going to happen when this guy sees a pony?

And now that the FTC is looking into the purchase much like a rich husband into his wife’s Saks account it could delay FB integrating Instagram into it’s dominion for six months or longer. If the acquisition was an effort to bring mobile closer it will be a while before that happens.

Facebook has recently dipped a toe deeper into search but whether or not this will show real profit is unclear.

So I’ll ask a meaningless question to most, if not all, of the people reading this: would you buy Facebook if you could?

Author turnthepage

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