Facebook on the Market

Over the last few weeks a lot of people have expressed great concern over the performance of facebook on the NASDAQ as well as the actual user numbers currently being generated. It is true that the current price/share is well below the initial offering, it is also true that new business and user activity has dropped as of late but there is good reason!

The timing of Facebook going public is very peculiar because summertime is a natural low-time for social networking. Vacationing and greater amounts of family time reduce the amount of time most people spend on facebook, and the amount of people who join facebook is going to drop! This is obvious.

Now for the stock offering. There was no shortage of people doubting the valuation of Facebook. News networks, bloggers, and businesses leaders alike warned of the over-valuation of the company. However, a drop is price does not mean the social network is dying. The market simply corrected the over-valuation. Yes, some people are going to lose money, but the stock market never guarantees on a return-on-investment! These people may actually make money over time, sometimes it just takes longer, and it will especially take longer when a company is overvalued.

VALUE BASED ON STOCK SALES

REVENUE OF FACEBOOK

Going public will always increase the value and cash of a company significantly, but facebook was too overvalued to sustain a $38.00 price for right now, however, with time facebook has the potential to do well in the stock market, but don't expect it to be a short-term money maker! It could hover around 25 - 30 for a long time before it starts gaining value.