Timeline for Facebook shows progress
While its shares still haven’t risen back to the IPO price, shift to mobile moves along
SAN FRANCISCO — In one year since going public, Facebook’s stock price hasn’t lived up to the over-the-top hype that made the social network the most anticipated IPO in years.
While Facebook has rapidly ramped up its mobile revenues, investors who bought in when the stock price momentarily touched $45 per share might believe the company is still a flop.
Though the stock is trading about $12 below its IPO price, it’s hard to argue that a company with more than 1.11 billion monthly active users and $219 million in net income on $1.46 billion in revenue in the last quarter isn’t doing well.
“They’ve monetized mobile and have introduced a ton of new products, so their revenue growth has continued unabated,” said Michael Pachter, managing director of equity research for Wedbush Securities.
“They do a good job as a public company, have stock as currency to attract and retain quality employees, and being public increases their disclosure. In all, I think that means they are successful as a public company,” Pachter said.
There have been swings and misses, like the company’s attempt to reinvent Facebook Poke into a feature to compete with the self-destructing photos app SnapChat. And more recently, Facebook has invested energy — and TV ad dollars — promoting its new Facebook Home for Android smartphones, but the app so far is receiving poor reviews and low user adoption rates. Going mobile
Overall, the company’s biggest hit is its post-IPO pivot to focus on mobile, which is particularly important for its future because 751 million monthly active users around the world go to Facebook via mobile devices like smartphones and tablets.
“I don’t know that Facebook needs to prove itself because pervasiveness is certainly not one of its problems,” said Brian Solis, a principal analyst at Altimeter Group.
After months of buildup, Facebook priced its initial offering of public stock on May 17, 2012, at $38 per share and officially joined the Nasdaq stock market the next morning. Investors who were expecting an instantly big pop in the stock price instead encountered frustrating technical problems that prevented timely trade confirmations.
Wall Street banks lost an estimated $500 million due to the opening-day glitches.
The Securities and Exchange Commission approved a plan by Nasdaq to pay $62 million to customers that lost money.
The stock price briefly touched $45 per share that first day but quickly fell back and has yet to rebound to the original price, dipping as low as $17.55 in September. On Friday, the stock closed at $26.25. Not over it yet
Chicago securities attorney Andrew Stoltmann has said Facebook’s IPO shattered investor trust in the market.
“Retail investors still have not got over the shellacking they took in Facebook,” he said in an email.
But a year ago at this time, Wall Street was already nervous about Facebook’s disclosure that a major portion of its user base was shifting to mobile, yet the company had no proven method of generating revenue from mobile. Speeding things up
Last September, Chief Executive Officer Mark Zuckerberg admitted the company made a big mistake relying on Webbased technology to build its mobile apps, which were frustratingly slow for users. The company then introduced faster native apps, which have helped spur more mobile growth.
Now, with new advertising products such as sponsored News Feed posts, the percentage of Facebook’s mobile revenue has risen from zero at the start of 2012 to 30 percent in the first quarter of 2013.
First-quarter ad revenues in general rose 43 percent compared to last year, and overall revenue was up 38 percent.
Wedbush’s Pachter believes Facebook’s stock will eventually return to its IPO price but said it needs to do better at managing costs, which are rising as the company adds employees and infrastructure.
bevangelista@sfchronicle.com