As the Facebook IPO edges closer, I am getting more aware of the growing number of negative comments surrounding the float. Indeed, this week so far I can’t find any article suggesting that Facebook is a ‘Buy’.
My views are well known. I summed them up months ago in The $100b Facebook Question. In essence I said that although I was an early (and still very active) user of Facebook and believed in its potential (it is closer to Holway’s MyTop than anything else around)I just couldn’t see it being worth $100b – well not for several years anyway. Assuming you wanted to see a return on your investment, a price closer to $50b seemed more appropriate. Looks like many now agree. However, whatever price Facebook comes at, expect an initial ‘pop’ as retail investors pile in collecting a Facebook share certificate in much the same way as I collected ‘first day covers’ when a youngster. I didn’t care about value or investment return– I just wanted to own the latest stamp issue.
But something more significant seems to be afoot. There seems to be a growing resentment to the way Facebook is operating. Facebook has had ‘issues’ with its privacy policies since the word go. Then, I must admit I was bit appalled at the way Mark Zuckerberg apparently did not consult his board over the $1b Instagram acquisition. I suppose it shouldn’t really matter but I also feel uneasy about reports that Zuckerberg attended the Facebook Roadshow this week dressed in a black hoodie.
Today I read JP Rangawami (Chief Scientist at Salesforece.com) blog Hmmm . He’d merely browsed a review of a speaker cable and then found his name in a sponsored link – see picture. Every day now I get reports of what my Facebook friends have read in the newspapers. On one occasion, it was clear that a friend was worried about a particular situation by the articles they had read. I pointed this out and my friend was appalled that I (and many others) had access to their reading habits. I am now very careful NOT to sign up for any apps which might appear on my Facebook page. It is this kind of behaviour that could turn me (and I’m sure many others) against Facebook.
Remember that the social networking world is awash with yesterday’s hits – MySpace, Bebo, Friends Reunited etc. Of course Facebook has over 900m users so is in a dominant position. But its behaviour could quickly change user perception.
Which is why, as the IPO approaches I am becoming more and more bearish about Facebook. I’m sure I will be reporting on massive rises in the first few days of trading whatever the IPO price. I’m less sure Facebook will provide any kind of meaningful medium term return.