Facebook’s underwriters kept the stock from dropping below its IPO of $38 on Friday. Now, without the security netting provided by Morgan Stanley, the true market price of the stock is emerging. Today, FB dropped 11% to close at $34.03. In the long-run, none of this matters. All of the trading activity for the next couple weeks will be based off of rumors and hype, not actual, concrete information. Investors who bought Facebook as a long-term investment should not even follow the stock’s activity until months from now when actual news about the company’s direction surfaces.
I’m long Facebook and here’s why:
Social networking is an industry that didn’t even exist a decade ago. Facebook, without a doubt, is the largest, most innovative and unparalleled social media company. They hold a monopoly on a service that 526 million people use daily. 720 of their 901 million monthly users are outside of the US and Canada. With projections of entering into Russia and China, in 3 years, Facebook could be an integral service for most of the world’s population.
When you purchase Facebook, you in turn, are investing in Mark Zuckerberg. Zuckerberg controls 57% of the company, which means there is no investor board or any voting power in public shares. Luckily, Zuckerberg is a visionary and levelheaded CEO. Compare 28 year old Steve Jobs or Bill Gates to Mark Zuckerberg, and you’ll find a significantly more mature and skilled CEO with a commitment to his long-term vision: to use Facebook to change the connectivity of the world. Just imagine what Zuckerberg can do with all of the additional cash Facebook developed through the IPO.
Facebook is in a great position to attract the best and brightest young minds straight out of college. Because the company is “hot” and pays their interns and employees well, it’s an extremely desirable place to work straight out of school. The competition for Facebook jobs and internships is intense which means the company has their pick at some of the smartest and promising young programmers today. A company like Facebook that hopes to make bold and fast impact on the world always needs new ideas.
Lastly, in my opinion, Facebook needs to, and is planning to create a phone. The development of this device should be done patiently and must be executed perfectly at launch. They may only get one good shot to impress the world. Smart phones are used in today’s world primarily to communicate and secondarily serve other functions through apps. Facebook definitely excels in these two categories online, now all they need is a beautiful piece of hardware to bundle these services in a mobile product.
Keep an eye out for my detailed ideas for the ideal Facebook Phone later this week.
[image via Clinard, Facebook Statistics and info via Facebook]