Through the Grapevine (June 4th 2012)
Another week has come and passed after Facebook’s controversial IPO.
While the markets have yet to recover from the plunge in share prices and disappointing results of the past week, negative assessments and feedback are being shared by financial experts all over the world.
Gary Weiss of Forbes commented on the strange amnesia taking over financial markets and investors when it comes to IPOs, therefore partly lifting the weight of responsibility off Facebook’s chest. “The only proven winners in IPOs are the issuers, insiders, and underwriters, with favored clients like hedge funds and institutional investors the only ones able to benefit consistently from IPOs that perform well out of the starting gate”, Weiss wrote on May 31st, pointing out that nowadays investors can retrieve financial information, and make more aware choices, through the Internet before deciding to buy shares.
Meanwhile, rumors over a possible market appearance of a Facebook smartphone made the headlines again, in what looks like a sort of cyclical warning over the Palo Alto company being ready to colonise the realm of hardware goods. “This is the third time that a semi-credible Facebook phone rumor has come up. Back on 2010,TechCrunch reported that Facebook was working on a smartphone, and then in 2011 it was the turn of AllThingsD to pick up on the rumor and run with it”, wrote Adrian Kingsley-Hughes of zdnet.com.
The author also explained that a move towards the hardware sector is very unlikely and would be extremely risky for Facebook as “Hardware is an enormously risky business; ask companies such as RIM or Motorola and they will tell you just how risky it can be. There is a massive scope for failure, and an equally massive scope for burning through huge piles of cash in the process.”
Just a few days earlier, on May 30th, another rumor pointed to the possibility of Zuckerberg’s company buying the Norwegian Opera Internet Browser to try and optimise web surfing via mobile phones, which many believe will be the next step in Facebook’s rise. The news is not yet confirmed but, as with all mobile-oriented acquisitions since Instagram, it is easy to foresee experts will start speculating about the price of a possible Opera purchase.
Lastly, the flop of Facebook’s IPO was not met with equal sorrow and concern by everybody around the world: Renren, the Facebook of China, has seen its share price skyrocketing since the IPO when “shares plunged into the $4 range in sympathy with the Facebook selloff. However, the price appears to have stabilized and may be beginning to climb higher”, reported Dave Goodboy on May 30th.
At least the IPO is making somebody happy.