Social media giant, Facebook, has had a rocky first year on the stock market since going public in May. Though stock prices still have not come close to their opening day high of $45 per share, Facebook’s stock price has recently shown signs of slowly but steadily increasing again. From August through October, stock prices bottomed out and remained around $19-20 per share. You can find the full daily history of Facebook’s stock prices here. Stock prices have risen slowly but consistently, standing at around $26 at the end of November.
Zuckerberg Reassures Stockholders
Facebook founder Mark Zuckerberg exuded confidence at his few recent press appearances, where he reassured stockholders that as Facebook continues to transition to mobile, the market price for the company will continue its incline. Zuckerberg explains that as Facebook implements more efficient ways to incorporate advertising and e-commerce elements into their apps for mobile devices, mobile users have the potential to be even more profitable than users on the site. Facebook’s advertising revenue from mobile was already up to 14% of total advertising revenue as of October 23rd. The company has shown the merit behind this strategy.
The first signs of a rise appeared in September at a Silicon Valley press conference where Zuckerberg announced that Facebook would be moving into a more competitive position with Google by incorporating more search features into its site. This comes at the same time Google moves in to compete more directly with Facebook. Google+ continues to build steam and offer many features and SEO benefits to encourage businesses to adopt its social network.
Sales Lockdown Release Sparks First Price Bump
When Facebook opened to the public at $42 per stock, it was valued at over $100 billion, making it the highest public opening of an American company. However, it quickly fell to less than 50% of its initial price. Many buyers were locked into their stocks for the first several months, which might have contributed to the stagnant price through the summer and early fall. But when the lockdown ended in October, a burst of stock sales helped boost the stock price by the first few dollars into the $20 range, and it seemed to spark the stock prices path to recovery.
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Slow Road to Stock Returns
Zuckerburg also tells shareholders that he expects growth to be slow for Facebook’s stock because the company plans to increase spending as a percentage of revenue. He also plans to increase investments into growth and expansion. Considering the development of the platform and the global growth of its user base over the past years, Zuckerburg shows he is very capable of expanding his platform. But he hasn’t really proven to investors that he can turn profit – not that he’s really tried, yet. A concern for shareholders now might be Google, especially as Google+ continues to grow with high expectations for 2013. It will be interesting to see if Google+ will actually start taking a bite out of Facebook’s market share.
Between Facebook’s rapid global growth and a heavy push towards mobile development, Zuckerburg clearly has a vision for the company’s future potential. It remains to be seen whether or not placing his long-term goals over short-term dividends will pay off for Facebook’s shareholders.