This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Why Facebook's IPO Flop Is Good News

Facebook has generated nothing in terms of revenue from mobile, where it has over 480 million users. In fact, it lists its mobile platforms twice in the risk factors section of its S-1 filing.

The mobile advertising market is expected to reach $2.9 billion by 2014, up from $1.6 billion in 2012, according to BIA/Kelsey. It's likely Facebook will capture a portion of this revenue, as it continues to focus on its mobile offerings. Buying Instagram for $1 billion is a prime example of Facebook boosting its mobile strategy.

It is about managing expectations, and Facebook will have to do so in the future if it wishes to grow its market cap in a meaningful way.

"Even if investors do believe in Facebook's potential, they may not give the company full credit for its future growth trajectory until it proves its ability to grow, for several quarters or even years," said Ken Allen, Director, Blackstone Advisory Partners, L.P in an email.

Facebook certainly has issues. It has to deal with major growth challenges. The ability to monetize mobile is one of the most important issues, if not the most important.

Forming a new developer strategy and generating significant revenue from payments are other issues that Facebook needs to solve to help support a supposed $100 billion-plus valuation.

Wall Street is already leaning toward the view that Facebook is not worth $100 billion, or maybe not even be worth $80 billion, at least right now. At its IPO price, Facebook had a valuation larger than McDonald's (MCD), General Motors (GM) or Goldman Sachs (GS).

Interested in more on Facebook? See TheStreet Ratings' report card for this stock.

Check out our new tech blog, Tech Trends. Follow TheStreet Tech on your wireless devices.

-- Written by Chris Ciaccia in New York

>Contact by Email.

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
FB $89.45 2.60%
AAPL $111.88 2.00%
GOOG $633.89 0.84%
TSLA $239.65 6.60%
YHOO $33.69 3.60%

Markets

Chart of I:DJI
DOW 16,654.77 +369.26 2.27%
S&P 500 1,987.66 +47.15 2.43%
NASDAQ 4,812.7080 +115.1720 2.45%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs