Facebook Comes Full Circle
Facebook (NASDAQ:FB) actually doled out several surprises in just the few months following its May IPO, and though the first round of shock was a disappointing one, the company managed to reverse its fortune in pretty short order.
The initial shock: Facebook isn’t infallible. Yes, revenue was up 32% in the second quarter, but that’s slower growth than investors had been accustomed to. And operating earnings only grew from 11 cents per share a year earlier to 12 cents in the second quarter, despite a 29% jump in users. Zuckerberg never had been worried about the income statement, and early investors were shocked to find that out the hard way, paying the price with a 57% dip in the stock’s price.
The rebound shock: Mark Zuckerberg needed less than one quarter to accept the fact that investors expect bottom line results now, rather than continued sharp growth in the user base. In a complete overhaul of the ad-sales process and by more effectively monetizing mobile, Facebook silenced the critics who assumed the worst after Q2’s numbers were released.