Social networking giant Facebook (FB) COO Sheryl Sandberg talked about the difficulties the company had met after its IPO (initial public offering) in an interview with financial news reporter Julie Boorstin on Monday.
Sandberg expressed disappointment with the company’s IPO and what had happened after the IPO. Sandberg also admitted the employees of Facebook are also disappointed with the decline of Facebook stock price after the public offering. Investors are worried about the capacity of the company to generate huge amounts of revenue from 950 million users since its listing, resulting in a cumulative decline of more than 40% in Facebook stock price. Facebook mainly generates revenues through advertising business. The company said in July this year its second quarter revenue grew 32% in the second quarter, but lower than 45% in the previous quarter.
Since Facebook IPO on May 18 this year, the company has launched several promising new features to enhance the company’s profitability and please advertisers and investors. In June of this year, Facebook launched a new advertising exchange system, to allow merchants to bid ads based on a user’s browser records. Shortly thereafter, Facebook set up a mobile advertising sector, and also recently began testing mobile ads in third-party applications. Just last week, Facebook launched a gift function. Using this feature, users can send gifts to his/her friends directly on Facebook site.
TechCrunch social networking product reporter Josh Constine wrote an article saying that investors are still believing that Facebook’s earnings outlook is not optimistic, because its users are transferring from PC to mobile devices. For PC users, Facebook can display seven advertisements on each page and get 30% of the revenue from the game payments. Many industry insiders believe that the only solution for Facebook to obtain revenue through mobile devices is providing more advertisements.
But Facebook took action quickly, and tested mobile advertising network on Zynga.com on testing. And a few weeks ago and Facebook allowed advertisers to use its own data to deliver accurate advertisements on non-Facebook mobile ad networks and applications. In addition, mobile social e-commerce service Gifts launched last Thursday can contribute a certain proportion of revenue from each transaction to Facebook, thus adding a new revenue source. Through these products or services mentioned above, Facebook has proved a second approach to get the revenue: To generate revenues by using the large number of user data collected. Therefore, for the current Facebook, balancing user experience and the number of ads is not a zero-sum game. In fact, if Facebook can utilize the large amount of data in hands, the number of ads on Facebook may tends to zero in one day.
Facebook stock price rose $0.33, or $1.52%, to end at $21.99 on the Nasdaq on Monday. Facebook has a stock price range between $17.55 and $45.00 since its IPO.