Why Facebook Changes Come Too Late
Facebook (NASDAQ: FB) this week unveiled even more goodies, including apps and targeted pages in hopes of restoring its fortunes, but its stock is continuing to tumble as a massive stock sale looms later this month.
Shares of Facebook stock were at $20.88 on the NASDAQ at the end of trading Wednesday, and while reports last week said the company’s results matched Wall Street’s expectations investors still aren’t showing confidence in the top social network’s future.
Facebook still hasn’t found a way to capitalize on mobile technology, and its stocks are suffering as a result. And, if that isn’t enough, on Aug. 16, company officers, directors and employees can start selling their stock, which could show if insiders are keeping the faith where Facebook is concerned. Under regulatory law, insiders can sell 268 million shares of stock 91 days after an initial public offering. And between 91 and 181 days after the IPO, the insiders can sell an extra 137 million shares.
Given the stock’s rapid plunge — from $38 when the IPO was announced down to the $21 or lower mark, investors are likely bracing themselves for a huge amount of Facebook stock to flood the market as insiders try to slow their losses, which will probably drive the stock’s price even lower.
According to the website IPOScoop.com, Facebook is now the second-worst IPO performer in the U.S. this year so far, marking a 43 percent price drop in just a few months. Unless the uber-popular social network can assure investors it can further monetize the site, Facebook and CEO Mark Zuckerberg may find themselves in serious financial trouble as investors dump their shares.
And investors are already feeling the pain, reports USA Today. For example, Swiss bankers UBS reported losing $375 million from handling Facebook stock for clients through the IPO launch.
Facebook, though, isn’t just sitting back and waiting for its stock to bottom out. Zuckerberg and company have launched several new features to the site, all aimed at attracting users and their valuable information, which can be brokered to advertisers and the mobile user market. However, if investors don’t believe the new features will help Facebook attract more advertising dollars and site users, the latest attractions may prove too late to save the company’s rapidly dropping fortunes.
Here’s a look at some of the features unveiled this week:
App Center
The social network is launching its App Center, or storefront, for all desktop and mobile applications available in every country where there are Facebook users.
The worldwide availability completes a staggered rollout that began in June in Australia, Canada, India, Ireland, New Zealand, South Africa and the United Kingdom. Now users in all markets will see an App Center bookmark on the left side of their homepages online and in the Facebook apps for iOS and Android.
The App Center provides further mobile functionality for the site, a crucial matter for a company that is losing money because of its inattention to mobile users. Opening the center worldwide is important, because according to Facebook’s Securities and Exchanges Commission filing this week, international users outside of the U.S. and Canada make up 81 percent of the company’s 955 million monthly active users. However, Facebook said, those international users aren’t spending money that reflects their high numbers, making up 50 percent of revenue in the last quarter.
Making the App Center global also may attract developers to the platform, generating app sales or advertising revenue for Facebook.
Timeline
If you’re still a hold-out over Timeline, you’re going to be using it soon anyway, whether you want to or not. Facebook has sent late-adapters a message giving them one week to set up and review Timeline, or the site will automatically migrate them over to the much maligned program.
Timeline has been around since January, but there are still a few people who haven’t surrendered their profiles, and by forcing users over, Facebook likely will see a backlash among users who are already dissatisfied with the site. However, migrating all users over to Timeline means revenue for Facebook. Timeline features a “Recent Activity” box that shows the apps you use, which could attract developers and advertising. Further, a revamped photos section encourages more browsing — and now Facebook runs advertising at the bottom of each photo window.
Page Post Targeting Enhanced
Facebook this week also began rolling out Page Post Targeting Enhanced, which allows pages to target posts to fans based on gender, ages, “likes’ and other characteristics, and even allows them to target messages to certain audiences.
Until now, Facebook Pages only targeted fans who spoke certain languages or who were in specific locations, but the updated features provides choices for page administrators to buy advertising to attract more fans. The options are only open to a select number of pages now, but will open to all pages over the next few weeks — just in time to beat the stock roll out and to add more revenues to Facebook’s coffers.
The three features are but a small portion of the dizzying array of options Facebook has rolled out in recent months to convince investors that its stock is worth the $38 a share it sought in its IPO — if not more.
However, the company also risks that its expensive new services will also either meet with a backlash or a yawn, so its feature roll-outs may be too little, too late, to convince insider investors to hold their stocks here in a few weeks and not sell them for pennies on the dollar.
