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Facebook's 'Option on the World' Valued at $4.50

Stocks in this article: FB

New attempts at valuing Facebook's monetization opportunity signal that it amounts to chump change. In its research, Credit Suisse makes a point of disclosing that the bank is in shareholder class-action lawsuits related to Facebook's IPO and says it isn't analyzing the merit of such lawsuits in its analysis

On Wednesday, Bloomberg reported that Facebook argued with the Securities and Exchange Commission to keep its mobile risks out of the IPO prospectus. Eventually, after a drawn-out fight between the social network, its lawyers and the SEC, the risks were included in the prospectus, the article noted.

While recent analyst attempts to value Facebook signal the challenges present in the company's IPO, there's reason to question whether the company was misleading in its disclosure of risks to mobile strategy.

Going back to the original filing on Feb. 1, mobile is listed as a key risk factor. "Growth in use of Facebook through our mobile products, where we do not currently display ads, as a substitute for use on personal computers may negatively affect our revenue and financial results," the filing said.

Facebook's mobile future has been a major concern for the company, as more users access the site through smartphones and tablets, where ad revenue is less lucrative than on its website. Facebook recently announced it had surpassed 1 billion users, with more than 600 million of them using mobile devices. That's up from 543 million at the end of the company's second-quarter earnings.

Facebook's mobile future has already faced stiff skepticism, as both Wall Street and the media have questioned the company's long-term ability to generate profits from its mobile initiatives, amid a near 50% post-IPO stock drop. Some speculated that the company's recent acquisition of Instagram, a photo-sharing app used primarily on mobile devices, is a way to generate revenue.

BTIG analyst Rich Greenfield recently downgraded the shares to "sell" with a $16 price target, on concerns over its mobile future. "We are making our second FB earnings reduction since the company went public to account for a more rapid shift to mobile, as well as decreased payment revenue given the shortfall created by Zynga," Greenfield wrote in his note.

CEO Mark Zuckerberg recently addressed questions about mobile at a tech conference, saying "how well we do with mobile is how we'll be judged." He noted that seven months ago, Facebook didn't run a single ad on mobile. "People are underestimating how fundamentally good mobile is for us."

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

-- Written by Antoine Gara and Chris Ciaccia in New York

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