Why Facebook’s IPO is Screwed (Sort Of)
So there’s a pretty critical aspect no one seems to be discussing regarding how valid the valuation on Facebook is; a few days ago, the maximum price tag placed was USD 5 billion … now speculators have doubled that amount. The former can make sense, but what is the latter based on?
Have they not considered that more and more Facebook users in developed markets (which have the comparatively stronger purchasing power) are accessing Facebook through their mobile phones. The operating system for mobile’s hot in use remains with Apple and Google, so that’s a danger point everyone seems to have ignored. What if scenario’s make it such that Facebook loads slowly on an Android, whereas Google+ opens instantaneously? Sure the anti-trust authorities would make their days hell, but when it comes down to the multi billion dollar markets, companies are tempted to play a little dirty.
Here’s a second problem, advertisers don’t advertise on mobile phones nowadays – which is the future No doubt about that – but its still new, just like internet first was and media planners were reluctant to delve into that on the get go.
This issue is not limited just to Facebook, even Pandora needs to be able to justify its valuation, and if they find a model that allows for the same or more revenue from mobile as with PC’s, then their stock would actually look pretty reasonable.