Loosing friends always hurts
Last week on Friday May 18th, Mark Zuckerberg floated his social media giant Facebook on the New York Stock Exchange (NYSE), which was the biggest technology company float in history. In the weeks leading up to the IPO there was a lot of debate over the US$38.00 per share price tag valuing the company around US$100 billion dollars. Many criticised the huge valuation by investment bank Morgan Stanley, and sure enough on the first day of trading the stock dropped 18% down to US$31.00. We have all read about large valuations of off market social media company takeovers however, Facebook was the first social media company to be traded on the NYSE.
The dramatic decline in value of Facebook shares during trading last week has angered investors so much so that Facebook shareholders have mounted a lawsuit against Mark Zuckerberg and the investment banks accusing them of withholding downgraded earnings forecasts from the market.
I understand the anger of investors. I got my fingers burnt on the Myer float after private equity firms made a lot of money out of me. Doesn’t make it any easier but I guess it teaches you to be patient and take some time to understand what your getting yourself into before jumping on the band wagon. I have seen a lot of businesses rush to get onto social media networks like Facebook and Twitter without a strategy or even an idea of what they want to leverage from it. For some people it’s of no consequence, but if your like me and don’t like to get your fingers burnt, spending a bit of time planning your foray into the online social space can enhance the level of positive impact for your business.