Facebook (NASDAQ:FB) has fundamentally changed the way people use the internet, there’s no denying that. From the early days in Harvard College in 2004, to the announcement of over 960 Million users in their recent earrings press conference on Thursday afternoon, Facebook has shown incredible growth around the world, despite privacy concerns from users (who don’t seem to realize their own responsibility over their information). Mark Zuckerberg is the magic man behind the idea that’s driving it forward, and there have been a lot of enhancements, and the site has been undergoing many changes to enhance the user experience.
Mark Zuckerberg’s entire net worth is in Facebook. When the company does well, he does well. His innovation and ideas steer the company forward, for better or worse. When investors look to place their money into owning a piece of this massive social network, they’re basically putting their money towards their belief in Mark Zuckerberg.
Lately though, a lot fewer people have been optimistic about investing in this web giant, and with good reason. Although their earnings have increased, and their total revenue was slightly higher than market expectations ($1.18 billion on the quarter, instead of the estimated $1.15 billion), what Facebook has yet to grasp from investors is assurance and confidence in growth potential, and their ability to monetize more effectively, particularly in mobile.
This lack of confidence has led the company down hill in terms of overall value. When their IPO went up on the NASDAQ in May 2012, it was priced at $38 per share, and the company was valued at around $110 billion. Today, the company’s value is estimated around $65 billion (2.74 billion shares outstanding), a little over half of what it was two months ago. Facebook closed at a mere $23.70 today, down almost 12% from Thursday, with an additional 0.23% decrease in after hours trading.
This doesn’t just mean that Facebook is worth less. It means Mark Zuckerberg is worth less too. All of his net worth is in Facebook, and now that Facebook is doing poorly in the eyes of Wall Street, Zuck has lost over $7.2 billion on his net worth, an astonishing number to pretty much everyone reading this I’m sure.
To put this into perspective, Zuckerberg was worth $19.1 billion when the IPO debuted to raise money for the company. To further elaborate on just how huge this drop is, Google chairman Eric Schmidt, based on his ownership stake in today’s most popular search giant, is $5.5 billion. Yeah… we’re getting the grim picture now.
Doing the math then, with that many shares, at the current price of $23.70 each, Zuck’s worth $11.98 Billion. That’s a pretty big decrease from $19.1 Billion.
Despite the losses, being worth just under $12 Billion still makes him among the top 72 richest people in the world, according to the most recent rankings from Forbes.
The second quarter is well-known within the organization to be the worst quarter of the year, as discussed in their recent press conference on Thursday. The outlook is better later in the year, as user activity tends to rise in the fall, and near the holidays, and with the introduction of a variety of new services and features to help Facebook gain more interaction from members. Among the changes yet to come in 2012 are the implementation of mobile advertising (which is said to be moving towards a more “social” direction), and an increase in activity from their new app store. Sponsored stories have also proved to carry decent results with them.
The problem isn’t with the potential for future gains though. Investors are impatient creatures, and we want results fast. The future likely holds great things for Facebook, but if the numbers don’t pick up fast enough to build confidence quickly enough, Facebook could be looking at stock prices in the teens before long.
(via CNN Money)
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