Is Facebook Heading to its IPO Price?
Mike is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
After Mark Zuckerberg watched his fortune get smaller in the last month, the decline may have finally stopped. Facebook (NASDAQ: FB) has been a news hog lately and all the new stories seem to be positive for Zuck's wallet. Since June 5, Facebook is up 23% and all the buyers on that deadly first day of trading are praying that Facebook heads back up to that $38 price.
Is this possible?
Well it turns out Facebook isn’t losing all its advertisers! General Motors (NYSE: GM) made Facebook owners wet their trousers when they announced that they were dropping their Facebook advertising budget. The ads weren’t getting the “likes” they desired, I guess. Ford (NYSE: F) and Coca-Cola (NYSE: KO) have different results. Ford is increasing its online and mobile advertising and a big part of this budget is spent on Facebook ads. Same deal with Coke. They are seeing the value in marketing through social media. By getting more Facebook fans, Ford and Coca-Cola are able to use Facebook users as promoters for their products. Just because GM can’t find enough value in Facebook doesn’t mean everybody is taking off.
The other pieces of news revolving Facebook is their huge strides in the mobile market. Of course they took over Instagram a while ago, which has huge advertising potential (maybe not worth the $$ though). Instagram has over 30 million users and is growing fast. These vintage photos need ads all over them.
Then recently they bought out Face.com so your friends can now tag you boozing it up in pictures even easier than before. Apple (NASDAQ: AAPL) announced that it will be ditching the Google maps app from the home screen of the new iPhones and throwing in the Facebook app. This is huge since there are so many non-tech savvy iPhone users today that do not change a thing on their home screen. These soccer moms and grandpas will now have the Facebook logo right in front of them whenever they turn on the phone. Plus having Facebook already on the home screen gives Facebook extra assurance that tech-savvy iPhone users will keep it right in front of them too.
The next set of results we see from Facebook will be huge. Even if they aren't extraordinary, any quarterly income around $250 mil will reassure the market that Facebook isn't falling apart after the stock decline.
A jump up to the IPO price is quite possible but in the tech world you never know. The market is beginning to have more confidence in the king of social media.
mthiessen has no positions in the stocks mentioned above. mthiessen runs a partnership that invests in public and private companies. The Motley Fool owns shares of Apple, Ford, Facebook, and The Coca-Cola Company. Motley Fool newsletter services recommend Apple, Ford, General Motors Company, and The Coca-Cola Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. If you have questions about this post or the Fool’s blog network, click here for information.