Facebook Inc (NASDAQ:FB) went public on May 18th, through an Initial Public Offer, at a price of $38 per share; today, the stock is available at only $19, representing a “catastrophic” 50% decline, and an equivalent loss to those who have held the stock since the IPO.
At first, a majority of you would say that those who sold their stake at $35 per share within the first few days, or $30 weeks later, saved on what could have been a huge loss on their investment. However, as we speak, there are those still holding the stock since purchasing it during the IPO, and are still hoping for a rebound.
Additionally, there are a few clever ones who went on to add on their IPO stake in the company by purchasing more shares, at a lower price from the secondary market. We have written so much about Facebook Inc (NASDAQ:FB), over the last couple of months, highlighting various milestones of the company since going public.
To begin with, in June, the company finally smiled after Apple Inc. (NASDAQ:AAPL) agreed to integrate Facebook’s mobile social platform into its iPhones and iPads devices. Additionally, the acquisition of Face.com followed shortly, along with other, several features and enhancements to the social network giant.
If any of these developments had been factored in before the IPO, then I would assume that it had a probability factor attached to it. Therefore, having confirmed the deals can only offer a better outlook, than initially envisioned.
Nonetheless, it has not been all good news for Facebook since going public; in its first ever results as a public company, Facebook registered a net loss of $157 million as featured in one of our articles, the only time the company, had to report a loss since inception.
The declining share price also meant that the chance of doing a follow on offer was no longer viable, and hence the company has planned for lockup releases, with more than two billion shares set to hit the market before the end of this year. In fact, Facebook, in a way remains one of the most over priced counters in its industry according to analyst price to earnings projections, as widely covered in our articles.
Market Watch notes that, at the current price of $19 per share, the company is worth approximately $41 billion, and points to its $10 billion worth of cash reserves as one major positive on the company’s future outlook. Additionally, we have in so many occasions highlighted the likelihood of the social network giant notching one billion views per month in the near term. Furthermore, in some of the analytical articles, we have identified the company as only second to Google Inc (NASDAQ:GOOG) in terms of popularity in the net.
According to MarketWatch, Facebook Inc (NASDAQ:FB) is not the only tech company to experience such rugged terrain at the early stages of it as a public company. Google went through similar difficulties in 2004, and within six months, it had already, more than doubled its offer price in the market.
I am not saying that Facebook will actually assume a miracle recovery against all odds and replicate the same. However, looking at its characteristics, I can’t see a major competitor to Facebook, in the business of social network. Google Inc (NASDAQ:GOOG) boasts similar characteristics, as the world leader in search engine industry.
These are some of the factors that promise better future returns in Facebook stock, as it holds a commanding position in its industry. I am not ignoring the competitors though, they all have the financial muscle to try wrestle leadership in the social networking industry, but as of now, Facebook holds the advantage.
However, according to sentiments shared by Facebook CEO Mark Zuckerberg, the company is focused on overcoming its biggest challenge, which is, monetization of its subscriber activity, and building traction in its mobile platform.
In essence, what am I implying here? You might wonder. It’s pretty simple, becoming a hater of Facebook Inc (NASDAQ:FB) stock now yields nothing, and for your record, am not implying taking on any positions on the stock. However, assessing the company’s competitive environment, as well as, its latest developments; and I tell you what, bring in the negatives of the recent past if you want; in my opinion, its utterly premature to hold a negative attitude on this stock.
