The Korea Herald

지나쌤

Founder under pressure as Facebook continues to fall

By Korea Herald

Published : Sept. 3, 2012 - 19:51

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Facebook Inc.’s struggle continues with no end in sight, especially after its stock prices hit a record low and marketers expressed skepticism whether Facebook ads were really working.

Shares of the world’s largest social network operator plummeted 5.4 percent to close at $18.06 in New York on Friday, the lowest amount since it went public on May 17 with $38 per share.

The fall of the company’s stock to half of its initial value is a shameful outcome, while its earlier projection of stock prices went well above $60 before the much-hyped second-largest initial public offering in U.S. history.

In terms of market capitalization, Facebook lost more than half of its value, falling to $43 billion from $100 billion.
Mark Zuckerberg, founder and CEO of Facebook. (Bloomberg) Mark Zuckerberg, founder and CEO of Facebook. (Bloomberg)

Facebook founder and CEO Mark Zuckerberg, who joined the U.S. biz tycoon club with the IPO, suffered a huge loss, with the value of his shares shrinking from $19.1 billion to $9 billion.

Facebook’s 2012 sales growth outlook turned bleak, too.

Market researcher EMarketer revised down the company’s revenue outlook this year to $5.04 billion on Friday from its earlier February projection of $6.1 billion.

The gloomier outlook is attributed to worse-than-expected effectiveness of Facebook advertisements.

The company’s second-quarter earnings report released in July showed that Facebook’s ad revenue weakened to a 28 percent gain year-on-year, compared to 36 percent in the first quarter and 48 percent in the last quarter of 2011. A big slide in ad growth slammed the company’s second-quarter revenue, resulting in only 32 percent increase year-on-year, compared to 45 percent in the previous quarter.

Some critics question the leadership of Zuckerberg. The 28-year-old is a computer whiz but a novice corporate manager, and they argue that perhaps he should step down and let a seasoned manager take care of the multibillion-dollar business.

However, Facebook is doing relatively well in South Korea.

The total number of Facebook users here has surpassed 8.8 million in mid-August out of Facebook’s 955 million users in total, putting the country on the 26th in the global ranking, according to statistics by Socialbakers.

By Kim Yoon-mi (yoonmi@heraldcorp.com)