NEW YORK (TheStreet) -- "What a difference a day makes," goes the old song. When it comes to the Big Kahuna of social networking I'd like to write a song called "What a Difference a Year Makes."
It's been 12 schizophrenic months for Facebook ( FB) since its fateful debut as a publicly traded company. Who can forget that day in May 2012 when its IPO, priced at $38 a share, was met with technical snafus and allegations of questionable disclosures resulting in the shares ending the day with a loss? As of the close on Friday, the share price, at $26.25, is still nearly $13 below the IPO price. Its three-month average daily volume has grown to over 38 million shares and it trades at a forward (one-year) PE of 33. But today Facebook has a new focus and is on track for "...a success unexpected in common hours," as Henry David Thoreau expressed it. CEO and social networking icon Mark Zuckerberg, having taken responsibility for FB's unsavory first year as a listed stock on the Nasdaq, has shifted gears to making his company a dominant player in the world of mobile devices. By the way, if you still haven't seen the movie "Social Network," put it at the top of your movie queue. Back around October 2012 Zuckerberg saw the light about the glaring misdirection of FB's efforts to build a web-centric platform and mediocre applications. The one sold at Apple's ( AAPL) "App Store" turned out to be as popular as a roach crawling across a freshly delivered pizza."It's probably one of the biggest mistakes we've ever made" Zuckerberg told Fortune Magazine's Jessi Hempel during an interview in late March 2013 at Facebook's Menlo Park, Calif., headquarters. FB's CEO was bound and determined to correct this mistake so his company could change its luck, and he did it! As the world's usage of technology shifted from desktops and laptop computers to mobile devices, Zuckerberg and Chief Technology Officer Mike Schroepfer finally realized FB was going the wrong direction. They knew they had to shift by first finding more mobile device engineers. They also had to focus on apps in a big way. Then the FB mobile device initiative would have to pick just one operating system to powerfully demonstrate its creativity and adaptability within the mobile space. By early April Zuckerberg introduced Facebook Home, which is a new application which uses software specifically made to accommodate Google's ( GOOG) popular Android devices. There's no better way for me to describe Facebook Home than to borrow the company's own description of it: "Facebook Home puts your friends at the heart of your phone. Replace your standard home screen with a steady stream of friends' posts and photos. Get to apps with one swipe -- just drag your profile picture up to open the app launcher. And when you download Facebook Messenger, you can keep chatting with friends when you're using other apps."
Anecdotally, I'm told it is catching on with customers who desire a fuller Facebook experience. The enormous risk that FB's leadership is taking is that it's dependent on one its biggest competitors, the incredibly successful Google and its line of products. At the present time Facebook Home is also available on Samsung mobile devices including the Samsung Galaxy S III, Samsung Galaxy Note II, in addition to Google's HTC One X and HTC One X+. So Facebook has already mitigated some of the risk of being too dependent on Google devices. Will Facebook alienate Apple with this exclusivity approach with Google and Samsung? Possibly, but it's too early to tell. If the end-users and advertisers climb on board in big numbers Facebook's gamble will have paid off and Mr. Zuckerberg will have placed his company in a league of their own. As the one-year chart below colorfully shows us, the last year has not been fun for shareholders. When it comes to revenue and earnings per share it has clearly been a struggle. 
FB data by YCharts
Chief Operating Officer Sheryl Sandberg believes in the future of FB as revealed by the fact that as of May 6 she owned a whopping 15,847,150 shares of the company. Multiply that by $26 and that equals over $410.8 million worth of solid commitment! If you think that's impressive, take a look at the top institutional holders of FB stock. As of Dec. 31, FMR LLC (aka Fidelity Investments) owned a breathtaking 74,743,056 shares or around 4.3% of the outstanding shares. As of March 31, Vanguard Group owned 41,628,225 shares representing nearly 2.4% of the outstanding shares of FB. But what about the Chairman and CEO of Facebook: How many shares of his company does Zuckerberg still own?
That's not an easy question to answer. My research suggests that directly or indirectly he owns 609.5 million shares of company stock as of March 31, according to the regulatory filing. His current holding would be worth well over $16 billion. One could feel financially secure with such a cache. Speaking of financial security FB, as of March 31, had total cash $9.47 billion and trailing 12-month operating cash flow of $1.89 billion. This leaves FB with levered free cash flow of nearly $1.15 billion as a result of year-over-year revenue growth of nearly 38%.
FB data by YCharts Chief Operating Officer Sheryl Sandberg believes in the future of FB as revealed by the fact that as of May 6 she owned a whopping 15,847,150 shares of the company. Multiply that by $26 and that equals over $410.8 million worth of solid commitment! If you think that's impressive, take a look at the top institutional holders of FB stock. As of Dec. 31, FMR LLC (aka Fidelity Investments) owned a breathtaking 74,743,056 shares or around 4.3% of the outstanding shares. As of March 31, Vanguard Group owned 41,628,225 shares representing nearly 2.4% of the outstanding shares of FB. But what about the Chairman and CEO of Facebook: How many shares of his company does Zuckerberg still own?
That's not an easy question to answer. My research suggests that directly or indirectly he owns 609.5 million shares of company stock as of March 31, according to the regulatory filing. His current holding would be worth well over $16 billion. One could feel financially secure with such a cache. Speaking of financial security FB, as of March 31, had total cash $9.47 billion and trailing 12-month operating cash flow of $1.89 billion. This leaves FB with levered free cash flow of nearly $1.15 billion as a result of year-over-year revenue growth of nearly 38%.
The new and improved Facebook isn't resting on its past accomplishments. On Thursday it, along with Twitter, introduced new software to integrate services with Google's Glass. Glass is the far-out idea of eyewear that has an onboard computer Google claims is the alternative to a smartphone. Facebook announced it created software that can upload photos on Google Glass to FB's world of social networking platforms. Glass is being used by a select few early guinea pigs and supposedly will be available later this year at a price of "less than $1,500," according to Google co-founder Sergey Brin. The insightful 17th-century French mathematician and scientist Blaise Pascal said, "All men's miseries derive from not being able to sit in a quiet room alone." That speaks to the magic of how Facebook serves its expansive client base and the direction the company has taken. With its teams of mobile product developers and engineers creating innovative ways to let women and men "sit in a quiet room alone" and yet be connected to friends and family around the globe, Facebook offers delightful and imaginative ways for its legion of users to escape their "miseries." That alone is potentially the most lucrative benefit that Facebook can sell today. If FB can make money with Home it may create lightning-fast versions for Apple devices as well as the other popular mobile device makers such as BlackBerry's ( BBRY) ubiquitous phones. Facebook is willing to think outside the box, knowing that 100 million Americans and hundreds of millions internationally access their Facebook accounts with mobile devices including tablets like the iPad. Through strategic alliances and accretive acquisitions Facebook is determined to survive and thrive. Did the IPO a year ago change Facebook and Mark Zuckerberg? In the Fortune Magazine interview he said, "We made this transition to being a public company, and at the same time we made this transition to being a mobile company ...and the transition to being a mobile company had probably 10 times the difference on the company that anything about being public had. The company has definitely changed in the last year..." The future value of Facebook shares will depend on that "transition" being monetized. Investors hope is this is already happening and will continue to happen in big and proven ways. View the company's most recent quarterly earnings report here. At the time of publication the author was long AAPL and GOOG. Follow @m8a2r1 This article was written by an independent contributor, separate from TheStreet's regular news coverage.
