Facebook status: down, but far from out

Reasons to be upbeat.

The fever pitch of speculation building up to Facebook’s IPO less than a week ago has been replaced by doomsayers revelling in the 11 per cent price slump since Friday’s launch. Should Mark Zuckerberg and the rest of Facebook’s newly minted billionaire founders, and almost 1,000 paper millionaire employees, be concerned by the drop since listing? No, there are several reasons to be upbeat.

The doomsayers have loved the downward stock slide. Stories of the NASDAQ’s technology wobbles and Morgan Stanley having to keep the stock price up soon after its listing are what you’d expect. People love the fact that the bigger they are, the harder they fall.

But there are several reasons for Facebook’s stockholders to take heart.

Firstly, let’s not forget Facebook’s $38 listing price was well above its initial expectations. Only weeks before the May 18 IPO, it was forecast to sell 337.4 million shares for between $28 and $35 per share, raising between $9 bn and $12 bn.

Five days before the list date, it raised the total number of shares to 421.2 m and ended up listing at this much higher level – netting $16bn and giving it a market capitalisation of about $104bn at listing.

To put this into context, Google offered 19m shares in its 2004 IPO, listing at $85 per share. It raised $1.67bn on market capitalisation of US$23 bn.

This gave Google the war chest it needed to launch a vast slew of mergers and acquisitions in the following years, including the high-profile purchase of YouTube in 2007.

Facebook’s IPO has raised 10 times Google’s amount from the sale, with market capitalisation three times Google’s – giving a serious steroid boost to its M&A budget. Facebook’s pre-IPO purchase of Instagram will be the first of many, helping the world’s most well-known social networking site, cement its market-leading position.

Interesting research from boutique researcher WealthInsight, The Facebook Elite, suggests that even if Facebook’s IPO may be overpriced, it does not mean that the company is not highly valuable.

Facebook’s earnings were $972m for the 12 months up until March 2012. Off revenue of $4.0bn, this represents a high profit margin of 24 per cent, putting it in line with the likes of Apple (30 per cent) and Google (27 per cent).

Facebook also makes more money from advertising than any other website and accounts for 28 per cent of display ads seen online. As more and more advertising moves online, Facebook’s revenues will almost certainly increase. Facebook had 901 million monthly active users (MAUs) and an average of 526 million daily active users as of 31 March 2012, an increase of 33 per cent and 41 per cent, respectively, compared to March, 2011. At the same time, Facebook’s 60 per cent penetration rate of internet users in the US and 45 per cent penetration rate of the world’s 2 billion internet users, together suggest that Facebook’s user base still has significant room for growth.

Facebook’s stock price will continue to attract attention, and will no doubt suffer periodic dips. Google suffered a big drop in late 2008, but now sells for more than $600. Facebook’s stocks may have dipped, but they are likely to rise far further.

Nicholas Moody is the editor of Private Banker International at VRL Financial News. He has written more about Facebook's recent venture here.

Photograph: Getty Images
A girl in an Ariana Grande top. Photo: Getty
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The joy of teenage girls is the heart of pop - we can't let the Manchester attack change that

What happened in Manchester feels horribly new because it targeted young girls in one of the places where young girls can be themselves to the fullest.

This morning, while the radio news talked of nothing but Manchester, my 10-year-old daughter asked me if it was still safe to go and see Adele at Wembley Stadium in July. The ticket was her big Christmas present and the printout of the order confirmation has been blu-tacked to her wall for months. She’s as excited about it as she has been excited about any event in her life, but now she’s also scared. Could this have happened to her when she saw Ed Sheeran the other week? Could it happen to her at Wembley, or anywhere else? I am sure that there are similar conversations happening across the country. Some long-awaited birthday treats will be cancelled. Red letter days erased from the calendar. Parents can allay their children’s fears (and their own), and decide to go ahead despite them, but they cannot pretend the fear isn’t there, suddenly, where it wasn’t before.

When I first started going to gigs in 1989, I never worried about not coming back. I fretted about missing the last train back to the suburbs, or not having a good view of the stage. You can feel unsafe at a gig, especially if you’re a girl in a moshpit where boys can’t keep their hands to themselves, but usually not life-or-death unsafe. Fatal crowd disasters such as Roskilde in 2000 and Cincinnati in 1979 have spurred the concert industry into making venues as safe as possible. There are sensible, practical measures you can take to avoid crushes.

Terrorism at music venues, however, is relatively new and hard to deal with. This is why the Bataclan massacre in November 2015 had such an enormous impact. There is no hierarchy of tragedy — a death due to terrorism is a death due to terrorism, whether it’s in a concert hall in Paris or a mosque in Iraq — but some tragedies are so close to home that they change the way you think. The first show I attended after the Bataclan (New Order in Brixton) was charged with a strange electricity, as defiance defeated anxiety and the rational mind silenced this new kind of fear. A few weeks later I saw Savages in Paris and it was even more intense. The venue was small and subterranean. I have never paid such close attention to the location of the exits.

Everyone has tried to reassert normality after an atrocity has felt like this: the first time they took the tube after 7/7, or went to work in New York in September 2001, or danced in Miami after the Pulse shootings, or stayed out late in Istanbul after last New Year’s Eve. In some countries the fear is never allowed to fade. What happened in Manchester feels horribly new because it targeted young girls in one of the places where young girls can be themselves to the fullest.

The joy of teenage girls is the heart of pop, and it is often misunderstood, if not patronised and dismissed. Their excitement doesn’t derive purely from fancying the star on the stage — when I saw Taylor Swift or Miley Cyrus (at the MEN arena in fact), the screaming was as intense as it is for any boy band. In fact, it’s not entirely to do with what’s happening on the stage at all. As a critic in my 40s who’s been to hundreds of shows, I may be bothered by an incoherent concept or a mid-set lull, but nobody around me is solely interested in the performance. Even shows that I’ve found disappointing have an ecstatic carnival atmosphere because a pop show is a catalyst for a great night out — one that may have been anticipated for months. The pop star is a vessel for a mess of inchoate desires and thrilling, confusing sensations (Bowie knew this) so the girls aren’t just screaming for the star; they’re screaming for themselves and for each other. They are celebrating music, of course, but also youth, friendship, the ineffable glee of the moment, life at its most unquenchable. It’s a rite of passage that should never be contaminated by even an inkling of dread.

First and foremost, I feel compassion for the victims and their friends and families. Then for the survivors, including Ariana Grande, who will be traumatised for a long time to come. But beyond those immediately affected, this atrocity will cast a long shadow across the youths of countless pop fans. Will something like this happen again? Perhaps not. Statistically, the possibility of an attack at one particular show is minuscule. Over time, the fear will subside, because it always does. My daughter is absolutely still going to see Adele, and she’ll have a whale of a time. But the knowledge that it could happen at all means a loss of innocence.

Dorian Lynskey is a journalist living in London. He blogs at:

33RevolutionsPerMinute.wordpress.com

0800 7318496