The dramatic fall of Facebook Inc (NASDAQ:FB)’s stock price, since its botched IPO in May, has fueled talk regarding Mark Zuckerberg’s position of CEO. Many investors are questioning if he is capable of leading the company, and some have hinted that he should step aside.
Facebook Inc (NASDAQ:FB)’s IPO has casused some serious pain to investors, as the stock prices have now fallen to nearly 50% of its original share price of $38. The stock has already dipped below $20 per share, and the outlook isn’t good.
According to LATimes.com, a prominent money manager stated, ” this was the most anticipated IPO in many years, and it was like an exploding cigar.” he went on to say, “Every investor thought they were about to become wealthy beyond their wildest dreams, and they had this blow up in their face.” He pointed out that the danger of the falling stock price could make advertisers less willing to advertise with Facebook, which would hurt the social networking giant’s revenue even more.
Many people lay the blame for many of the company’s problems squarely on Zuckerberg. He is the largest shareholder in the company, so nothing happens without his say-so. The consensus is that Mark Zuckerberg over inflated the value of the IPO, when he set it at an extremely high $100 billion. One of the things fueling the boost in price, is that prior to the IPO, several large shareholders sold of large amounts of their holdings, which was seen as a move to boost profit for the company, at the expense of subsequent investors.
Zuckerberg has seemed to show little respect for normal corporate behavior, and has at times seemed almost indifferent to how a CEO should carry himself. For Facebook Inc (NASDAQ:FB)’s first big investor’s meeting, Zuckerberg chose his casual attire of sneakers and a hoodie, a move which many people considered disrespectful, and blatantly lazy.
Chris Whalen, of Tangent Capital, thinks Zuckerberg needs to grow up. He said this of Zuckerberg’s apparel: “His behavior is what I would expect of someone his age-the hoodies and everything else. He’s trying to appeal to his audience, instead of being responsible to his investors. His job now, is to run the company.”
Even former Apple Inc. (NASDAQ:AAPL) CEO and co-founder, the late Steve Jobs, who was normally attired in a turtleneck and jeans, dressed for the occasion, by wearing a suit when addressing investors during the early days of his company.
There are some experts who believe that the criticism of Zuckerberg is a little over the top. They point out that the stock price had tanked, due to the fact that Facebook did not have as much growth potential as they thought, when it was first offered.
Even Zuckerberg has admitted to employees that watching the stock price is painful. Indeed, he should know as he tumbled from the list of the top 40 richest people in the world, as we reported here on ValueWalk.
According to the Wall Street Journal, in a report in which they cited sources “familiar with the meeting”, Zuckerberg held a meeting with employees to help improve morale, and try to instill faith in the company. He reportedly said that the press doesn’t know about the future plans of the company, and that if they did, they would have equal faith in the company’s ability to actually fulfill the lofty goals which had been set. He also said that the investments the company had made in past months would soon yield a result, which should help turn things around.
Something needs to turn around. The company has gone from a slick downhill slide, to a free-fall in stock prices in recent weeks, and investors are tired of bleeding. Perhaps a change in management could make a difference.
Should Zuckerberg step down? There are a few other cases where a founder has stepped down, in order to allow his company to grow. I think that some management changes could possibly help Facebook get back on the right track. However, I think they should look to someone who has experience in the corporate world, rather than at playing X-Box and Playstation. Perhaps this could be the answer.