Have you been following Trading for Dummies, i.e., the media trying to explain the Facebook IPO to the rest of us? Head scratcher, right? Yeah, well, don’t look to me for assistance!
So they open at $38 a share, it goes up, it goes down, it closes with a gain of 23 cents – when anything less than a $50 close would be UTTER HUMILIATION! (News media hype.) And Monday it was at $34 bucks.
As Wall Street’s Gordon Gekko might say, “Oh well. So I only made 10 million bucks today.”
Dumb Guy Explanation!
Apparently, two things are at work here. Facebook gets a good chunk of its revenue from advertising on the desktop site. Unfortunately, the news came out in the days before the IPO that General Motors was suspending its Facebook ads, unsure of their effectiveness. That shook some investor confidence.
Second, many FB users are migrating more and more to mobile use on their smartphones. And Facebook really hasn’t figured that realm out quite yet – the advertising, that is. So, they have been buying up mobile players left and right, like Instagram, Lightbox as well as geo-location service Gowalla and mobile gift-card app Karma.
The Outlook! (dumb guy version)
Day One may have been a black eye, but nobody seems to be panicking just yet. One thing is certain…Facebook knows EVERYTHING about its members. Once they figure out how to leverage that info into mobile advertisement, it’s total world domination, baby!
What do you think? Check out this article, “Facebook stumbles, but still has time to prove itself” to learn more.