According to data disclosed by renowned remuneration analysis provider Equilar, Facebook (FB) IPO failure in May this year not only has affected the company’s investors, but also had a massive impact on the personal wealth of Facebook staffs. Excluding the loss of income of executives, since Facebook IPO, the average wealth of Facebook employees has shrunk by about $2 million.
Facebook went public at an IPO price of $38 per share in May this year, but FB stock price constantly falls after its public offering. In early September, FB stock price hit a low of $17.55. Subsequently, FB stock price rebounded. Although, the stock reported at $20.91 per share as of the market close last Friday, but is still far below its IPO price of $38. Despite FB stock price has dropped sharply by comparison to its IPO price, but it still seems to come to an end. FB stock price is likely to continue to drop due to the pressure s associated with the expiration of locked-up shares as well as the crisis appearing in the mobile services.
Facebook recently reached a major milestone: its monthly active users reached up to 1 billion. It took the social networking site more than eight years – precisely 105 months, to reach this milestone.
It took 55 months that Facebook’s monthly active users reached 100 million, but the figure grew to 200 million in the subsequent eight months, and to $300 million five months later.
Since then, Facebook’s user growth rate is relatively stable. Every increase of 1 million cost about half a year, during the period the user base increased from $300 million to $900 million. The growth rate is amazing, but the company’s pace to generate revenues has slowed down. For the second quarter of this year, Facebook’ revenues increased 32% year-over-year, but below last quarter’s 45%, as more and more users are shifting to mobile devices from the desktop end; how to make money has become the biggest problem Facebook is in the face of at present.
After Zynga (ZNGA) cut its guidance for the third quarter results, there came out the voice that Zynga may be acquired by Facebook and Amazon (AMZN). And the close link between Facebook and Zynga also attracts much attention.
The IPO regulatory filing submitted by Facebook in February this year, 12% of the social networking giant’s revenues were derived from Zynga, and this figure reached 15% in the first quarter this year (relatively lower than 19% in the same period of 2011). In addition, Zynga’s CEO Mark Pincus is also one of Facebook’s investors.
Zynga is currently in predicament and Facebook is also paying price for this. FB stock prices fell nearly 5% last Friday. The reason for the decline of FB stock price is that the social game developer no longer favored by Wall street lowered its short-term performance expectation. In other words, the decline of 12% in Zynga stock price led to a 5% drop in FB stock price. When Zynga released poor second quarter results, its share price slumped 37% on July 26, and FB stock price also lost 12% that day. On the surface, it seems that every time when Zynga stock price retreat, Facebook will be impacted. Therefore, the logic came out that the acquisition of Zynga may help recover the social gaming giant’s share price meanwhile also boost FB stock price. But daily Finance pointed out that the acquisition will actually make no sense as Facebook will only buy one type of companies: small startup company; and generally for two reasons: technology and talents; and some times, just for talents.
Facebook is the cornerstone of Zynga and the latter’s success is contributed by the platform provided by the former. Zynga is completely unable to lift the interest of Facebook, because Facebook has also no reason to enter the gaming market which it does not fit. Zynga does collect a lot of talents, but there is no need to get talent by overall take over for Facebook. If the employees of Zynga want to join Facebook, they know how to contact the right people much better than anyone else. In addition, mobile platform is the most important part Facebook is focusing on, while Zynga’s most valuable assets lie in desktop end and its high growth in business has become history. Make the story short, if Facebook cares its shor-term stock price volatilities, the acquisition of Zynga will result in a boost effect. As Zuckberg has said Facebook has its own long term strategies, therefore, from the perspective of this, the acquisition will be not consistent with Facebook’s strategies.