Facebook Should Message Investors More Often
Facebook (NASDAQ:FB) made its very complicated debut on the Nasdaq more than 5 months ago. The world’s largest social media network has faced many issues, including everything from opening day trade confirmations to mobile growing pains. Facebook’s stock price was cut in half in the months following the initial public offering. Making matters worse, there was little communication from Facebook executives regarding investor concerns. However, when they do send a message out, the results speak for themselves.
Investors have requested more information and clarity from Facebook since the very beginning. After the company suffered its Nasdaq debacle, the issue was mostly brushed aside by management. Hours before the initial public offering, chief executive officer and founder Mark Zuckerberg hosted an all-night hackathon. The following day, he was married to his college sweetheart. Anyone looking for an official acknowledgment from the Facebook team had to settle for Sheryl Sandberg, chief operating officer, making light of the situation in a speech at Harvard Business School. She poked fun by saying, “I wish for you four things. First, that you keep in touch via Facebook. This is critical to your future success. And we’re public now so can you click on an ad or two while you’re there?”
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With Facebook’s stock trading below $20 a share, Zuckerberg took center stage at the TechCrunch Disrupt conference in September, his first media appearance since the IPO. He said that the company’s mobile strategy is “misunderstood” and that “we are going to do the things we think that add value over the long-term.” Investors were happy with the long delayed message, and the encouraging words sent shares jumping 8 percent. In her first media appearance since the IPO, Sandberg spoke to CNBC earlier this month and said she was surprised by what happened in the IPO, but “we are taking that energy and really focusing on proving to the world that we can continue to grow our business, continue to grow our users and their engagement, and build a great company.”
The encouraging, but detail lacking message, finally received more clarity late Tuesday when Facebook reported its earnings for the third quarter. Adjusted earnings beat estimates by one cent, with revenue coming in higher than expected, a rare occurrence this earnings season. Furthermore, its mobile message is being heard loud and clear. Zuckerberg explains on the conference call, “We already reach more than a billion people worldwide, including 600 million on mobile, growing quickly and up from 376 million last year. Facebook is the most widely downloaded app on basically every smartphone platform, so we’re well positioned to reach the growing smartphone population.” After only six months of increasing its mobile ad business, 14 percent of Facebook’s advertising revenue came from mobile in the third quarter.
Sandberg also provided insight on the conference call and was not afraid to name-drop some big companies. She says, “For brand marketers like Wal-Mart (NYSE:WMT) and Procter & Gamble (NYSE:PG), Facebook offers the ability to reach customers, build awareness, and drive positive association, affinity, and consideration. We help brand marketers develop ongoing and often daily relationships with customers, in many cases for the first time.” She later adds, “For direct marketers like Amazon.com (NASDAQ:AMZN) and Capital One (NYSE:COF), working with Facebook can achieve high ROI by tapping into our incredibly accurate targeting capabilities. This represents a significant opportunity for us in a $55 billion global market. For the 12.8 million local businesses that already have Facebook pages, our products, including location and interest targeting and Offers, deepen customer relationships and drive sales.”
One of the biggest changes in tone came from Zuckerberg, though. In a February S-1 filing with the Securities and Exchange Commission, he wrote, “Facebook was not originally created to be a company.” However, Zuckerberg said on the latest earnings call that he now has a goal “to build a strong monetization and economic engine to build Facebook into one of the world’s most valuable companies.” The company still has a long way to go to accomplish this goal, but shares surged more than 20 percent in Wednesday trading, their biggest single-day increase in company history.
Investor Insight: Facebook Shows Mobile Strength With These Two Charts