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Inside Facebook

Inside Facebook

Facebook stock falls to $34 on second day of trading; pundits quick to criticize

Posted: 21 May 2012 04:03 PM PDT

As many expected, Facebook’s stock fell below its offer price today, settling at $34.33 when the market closed.

Some pundits have rushed to call the social network’s initial public offering a flop, but it is important to distinguish between what a successful offering would be for Facebook versus what the media and some investors might have wanted to see. It is fairly common for stocks to fall below their offer price within the first six months after an IPO. The lower stock price does indicate that the market finds Facebook overvalued in the near term, though its future potential could be much higher.

As Fortune senior editor Dan Primack and Trinity Ventures partner Daniel Scholnick have written, Facebook’s was a highly successful IPO in that the social network likely maximized how much money it raised in the offering. Without a first day “pop,” Facebook can feel confident that $38 was the right IPO price. Had the stock gone way up, the company and investors who sold shares in the offering would have missed an opportunity to make more. Some aggressive investors might be disappointed that the stock didn’t pop on Friday and that it fell today, but that doesn’t change the outcome of the IPO for Facebook, which raised $16 billion in the offering.

Further, the IPO generated so much demand, the Nasdaq faced a number of technical issues that could result in $13 million in compensation for bad trades, according to the Wall Street Journal. On Friday, trading was delayed about 30 minutes and throughout the day investors faced issues that prevented them from confirming their trades of the social network’s stock. Nasdaq executives say the exchange will use $10 million of its own proceeds from the IPO in addition to a standing $3 million cap on payouts to customers who suffer losses as a result of failures in the exchange’s systems. It’s possible that those technical issues led some investors to sour on the stock.

Now, without underwriters to prop up the stock as they did on Friday, the market is determining an appropriate price for the social network. Business Insider editor and CEO Henry Blodget writes that the IPO price valued Facebook at about 65 times its 2013 estimated earnings per share. Apple, on the other hand, is trading at only 10 times its estimated earnings per share. Google is trading at 12 times its estimated EPS. That’s not to say Facebook isn’t likely to one day be worth much more than it is today, but it’s difficult for the market to uphold a $100 billion valuation for a company with $3.71 billion in revenue and $1 billion in profit last year, especially when its margins seem to be declining.

As Facebook continues to grow, its operating costs are going to increase and its stock is likely to fluctuate, but Benchmark Capital partner Bill Gurley points to Amazon as an example Facebook might follow. The Internet company saw its stock linger below its $18 IPO price for almost two months before really picking up. Fifteen years later, the e-commerce company is trading around $218 per share.

Investing in Facebook: Clara Shih of Hearsay Social

Posted: 21 May 2012 11:39 AM PDT

This week, Inside Facebook asks people who have built businesses on the Facebook platform why they believe in the company. These are the people that are truly invested in Facebook, whether or not they bought stock.

First up is Clara Shih, co-founder and CEO of Hearsay Social, an enterprise platform that allows financial services, insurance, retail and other brands to manage their online presence — on the local and corporate levels — and maintain regulatory compliance as they engage on social media sites.

Seeing the potential of Facebook

"It was the first f8 on May 24, 2007," Shih says. "I remember the date because it changed my life."

Facebook announced its platform that day, enabling any developer to build applications on the site. The company also introduced the idea of the social graph. This stood out to Shih, who had been working at Salesforce at the time.

"It really got me thinking about what Facebook could become. I realized that your trusted online identity combined with News Feed could be transformative for businesses."

Shih got to work on an app called Faceforce, which pulled Facebook profile information into a company's Salesforce system to augment CRM data. Shih says that when Faceforce went viral, it was validation that her thoughts about Facebook were on the right track.

Developing a business idea

The success of Faceforce ultimately led to a book deal. Shih wrote "The Facebook Era: Tapping Online Social Networks to Build Better Products, Reach New Audiences, and Sell More Stuff." She says researching the book led her to want to start her own business focused on Facebook marketing.

"The more that I learned as I talked to brands and users, the more I became convinced Facebook would be the next Google," says Shih, who previously worked in strategy and business operations at Google. "It became clear that social media is here to stay and it will be as big, if not bigger, than the Internet."

When "The Facebook Era" made the New York Times bestseller list, it was further validation that Shih was onto something. She reached out to former Stanford classmate Steve Garrity, and the two decided to create Hearsay Social, which is a marketing platform that serves businesses with a corporate/local structure and addresses issues of compliance. The company launched publicly in February 2011, with Farmers Insurance, State Farm and 24 Hour Fitness as customers.

"Facebook has successfully changed consumer behavior,” Shih says. “It changes the way consumers find new information, content and recommendations. That's transformational for marketers."

Confidence in Facebook

Shih says Facebook's growth rate combined with an opportunity to interact "the way we prefer to interact,” gives her confidence in the future of the platform.

"Facebook gets us back to basic human behaviors," Shih says. "Facebook is all about people. We have innate human desires to connect, and Facebook is facilitating that."

Shih says this works particularly well for "relationship sellers" — like the insurance companies and other businesses that use Hearsay Social. Facebook enables these companies to connect with individual consumers at scale.

Facebook and developers

Hearsay has had a good working relationship with Facebook since it began. Shih believes the social network has created “a win-win-win situation” with its platform.

First, developers have great revenue potential because of Facebook, Shih says. Facebook itself benefits because it can get into new industries without having to build its own products, for example instead of making a music feature, it can integrate Spotify, Vevo and others, which drive up the value and stickiness of the site. Finally, users benefit because they get access to all the innovation from third-party developers.

Facebook’s future

Looking forward, Shih believes Facebook will continue to transform industries and monetize in new ways. She says the company has only scratched the surface of its potential and suggests Facebook could get into social search, commerce, television or even out-of-home advertising that uses near-field technology to recognize who people are when they walk by.

“In the near term, they're doing a great job innovating with new ads,” Shih says. “In the medium term, they're in the best position to monetize mobile and internationally. And in the long term, the possibilities are endless."

Inside Network is looking for a Social Marketing Specialist to lead content for the Facebook Marketing Bible

Posted: 21 May 2012 09:50 AM PDT

Inside Network is looking to hire a Social Marketing Specialist to lead content development for the Facebook Marketing Bible, our industry-leading subscription product for marketing and advertising on Facebook.

We’re looking for someone passionate about social media marketing to publish expert analysis of opportunities for marketers and advertisers on the Facebook platform, and become a thought leader in the fast-growing social marketing industry. The position will be based in our San Francisco office.

Ideally, candidates will have some hands-on experience with Facebook marketing or advertising campaigns, but ambition and a strong desire to learn are most important to us. If you want to write about Facebook marketing and advertising, and help both small and large businesses optimize their social media marketing strategies, we encourage you to apply.

See the full job listing and apply here.

Socialcam, Skype, Viddy, Pinterest, Zynga.com, more on this week’s top 20 growing Facebook apps by MAU

Posted: 21 May 2012 08:15 AM PDT

Video apps and games were popular on our list of the fastest growing Facebook applications by monthly active users this week.

Titles on our list gained the most MAU of any apps on the platform, growing from between 615,600 and 9.7 million MAU, based on our AppData tracking service.

Top Gainers This Week

Name MAU Gain Gain,%
1.   Socialcam 51,500,000 +9,700,000 + 23%
2.   Chill 12,200,000 +5,100,000 + 72%
3.   Mynet 5,800,000 +2,400,000 + 71%
4.   Candy Crush Saga 7,700,000 +1,700,000 + 28%
5.   Pinterest 11,700,000 +1,500,000 + 15%
6.   Zoosk 14,800,000 +1,500,000 + 11%
7.   Skype 14,200,000 +1,300,000 + 10%
8.   Pyramid Solitaire Saga 2,100,000 +1,280,000 + 156%
9.   Buggle 2,500,000 +1,100,000 + 79%
10.   Marvel: Avengers Alliance 8,500,000 +1,100,000 + 15%
11.   Lost Bubble 1,100,000 +980,000 + 817%
12.   Metacafe 17,900,000 +800,000 + 5%
13.   Viddy 36,900,000 +800,000 + 2%
14.   Yahoo! Social Bar 39,500,000 +800,000 + 2%
15.   Daily Horoscope 8,300,000 +700,000 + 9%
16.   schoolFeed 15,400,000 +700,000 + 5%
17.   Terra 5,400,000 +700,000 + 15%
18.   Xperia™ 3,900,000 +700,000 + 22%
19.   Zynga 3,900,000 +700,000 + 22%
20.   Zapkolik 12,615,580 +615,580 + 5%

Socialcam gained a whopping 9.7 million MAU this week; the app posts videos to a user's stream and shares stories every time someone watches a video with the service. Socialcam has quickly become the top Facebook app by MAU, but it’s important to note that as Facebook continues to experiment with how Open Graph apps interact with the platform, social video players and other similar apps are likely to continue to see higher than average fluctuations in active user counts over the coming months.

A few video websites made the list — Chill, Mynet, Metacafe and Zapkolik. Video chat app Skype and mobile video app Viddy were also among the video apps on the list this week.

Games continued to be led by Candy Crush Saga though Zynga’s off-Facebook games platform also made the list this week. Pinterest saw renewed growth. Zoosk is moving out of the dating realm and into coupledom with a couples profile option. A horoscope app that posts frequent updates, as well as a few news site integrations made up the rest of the list.

All data in this post comes from our traffic tracking service, AppData. Stay tuned for our look at the top weekly gainers by daily active users on Wednesday, and the top emerging apps on Friday.

tirsdag den 22. maj 2012 at 07.29