Facebook drops below Amazon in value with 11% plunge

One of the interesting parts of Facebook’s Wall Street debut was the fact that the social network was initially considered more valuable than industry veteran Amazon.com. But no more.

Facebook shares fell nearly 11 percent today on the company’s second day of trading, despite broader gains in the stock market. The decline of $4.20, to $34.03, puts Facebook’s market value around $93 billion, compared to more than $100 billion based on the initial pricing of its shares.

Amazon by comparison has a market value of more than $98 billion.

The decline for Facebook comes amid questions about the social network’s ability to generate enough advertising revenue to justify its lofty valuation, despite a user base that now numbers more than 900 million people — “the largest community in the history of the world,” as Facebook CEO Mark Zuckerberg puts it.

See this weekend’s GeekWire podcast for more discussion of Facebook’s long-term prospects with Nat Burgess of Corum Group, a mergers-and-acquisitions specialist who is skeptical about the company’s ability to adequately monetize its user base.

 

  • Guest

    Congratulations to Amazon on retaking the valuation crown!

  • Guest

    This evening, as Mr. Zuckerberg sits down to dinner with his wife, he has a whole new reality to address.  Such as, personally, losing $2.1 Billion during the day.

    All of a sudden, his former wisdom and mantras of “social” and “connected” might start to ring a little hollow?  The myth of a “the world’s largest community” starts to shatter (I mean, really, having an account with 300 friends does not make me part of 900 million any more than because I’ve flown on a Boeing plane, I’m connected with everyone else who’s ever flown on a Boeing plane.

    The real issue as some have pointed out is how do you maintain worker enthusiasm who are counting on an increase in their portfolio’s stock value?  If every day I go to work I lose more money than I earn, um, something’s wrong.

    • Guest

      Any man who sees a 10% drop in his company’s stock price and quits provided no value to that company to begin with.

      Some lesser men will leave Facebook. Those who truly believe in Mark’s vision would continue to work for free (but, of course, they will continue to receive money). After all, this is a company with very humble beginnings and very pragmatic aspirations.

      Thank you, Facebook, for humilizing.

      • Guest

        The issue is that Mark’s “vision” is a little thin.  Not worth a 100x P/E valuation.  

        Come on, FB has had 3x years to address “mobile” (if you time “mobile” from the birth of the iPhone).  What do they do?  Spend $1B to buy a no-revenue mobile company.  That isn’t vision.  It’s fear.

        So, losing 10% in a day is palatable.  But, what happens if it’s a steady decline over the next year.  When instead of a $ million in options, I now have a couple hundred thousand.  The Kool Aid starts to not taste so sweet.

        Vision?  Come on.  It was a MySpace for rich kids, then it got cool.  Now it’s for Mothers and Grandmothers.

        • Guest

          We apologize that you do not understand Facebook as a long-term investment. We also apologize that you do not understand that a truly talented man will consider “a couple hundred thousand $” in stock to be satisfactory compensation for his efforts.

          Facebook is not a “MySpace for … Mothers [sic] and Grandmothers [sic].” It is a force for geopolitical change, having brought down five oppressive Arab regimes. Facebook is a force for good, having registered more than 90 million organ donors. Facebook has already replaced e-mail and instant messaging for an entire generation, and other services such as casual video games and teleconferencing are already being so disrupted. We believe that the Facebook mobile phone could sell 900 million units in its first two years, more than all smartphones combined.

          We are glad you have benefited from this education.

          We do not own shares of Facebook.

          • GuestAgain

            With that level of Kool Aid, I doubt you’ll consider any objective reasoning.

            Regardless, because I feel you insulted the thousands of people who were truly involved in the Arab Spring (and who died or have the scars to prove it), I’ll simply link to the recent story about the “Failures of the Facebook Generation in the Arab Spring…” written by an expert on the topic:

            http://www.thedailybeast.com/articles/2012/05/21/the-failures-of-the-facebook-generation-in-the-arab-spring.html 

            BTW, email is not dead. Every Jr./Sr. high school and college student continues to use it.

          • Guest

            Regardless of the political intelligence of the men using Facebook, one cannot dispute the fact that they used the world’s #1 social network to effect regime change in a half dozen nations.  If that isn’t worth $4 trillion, the Facebook valuation that my friend Victor proposed two weeks ago, I don’t know what is.

            And as far as e-mail goes, any vestigial use by those under 23 is simply a façade. You’ll notice that young “e-mail” users are on Gmail, which thanks to Google+ is the second-largest social network in the world, and Facebook, whose @facebook.com e-mail service has the largest pool of users of any service in the world. Traditional e-mail clients have already fallen out of favour and young people are already using the messaging features of their social networks instead.

          • Victor

            Wow! You sure have an obsession with this Victor guy. Why hide your name? Come out of the closet already. What a troll. 

          • Guest

            Victor, please stay on the topic. We’re just trying to have a discussion.

            You may call me Susan if you prefer to use names.

          • Victor

            Twisting words and fact while repeatedly spewing them all over the place is not having a discussion, it is the classic behavior of a troll. I don’t care who you are, coward.

          • Victor

            I heard the same kind of speech by now ex-Microsoft employees a little over a decade ago. It appears all big successful US tech companies run like cults. Microsoft, Google, Apple, now Facebook.

        • Guest

          The market will ultimately decide what P?E FB is worth, not you.

  • http://www.facebook.com/profile.php?id=1372686819 Cody Harris

    Yes Mr. Zuckerberg and a few others created Facebook, but the company today is not just those few and I believe that fact needs to be remembered.  The Facebook of today consists of an amazing group of very talented people.  Any company would be lucky to have the upper-management team that is in place currently at Facebook – Miss Sandberg, Mr. Cox, Mr. Ebersman, and Mr. Schrange. 

    Along with this group are a couple of thousand of the most creative and dedicated people in the industry- all working to continue the trajectory that Facebook has been on since it’s inception. The fact that company went public is NOT going to cause it’s downfall nor is the daily fluctuations of the stock price or the value of their holdings. 

  • ManyGuestsHere

    For the past 3 years Facebook’s “innovation” has consisted of buying their way into relevance by acquiring other companies.
    Facebook completely slept through the emergence of “mobile first” and the shift in consumer engagement.

    They are now playing catch-up.  A very expensive game.

    Today’s business/finance stories detail how the stock was intentionally over-priced at launch (and Material information was not properly disseminated) and how the next Quarter’s numbers are going to show a continued decline in P/E.

    A valuation at $20 billion would have been fair and reasonable.  But, no, they knew they could hookwink the lemmings into believing in a $100 billion valuation.  If this doesn’t screw up the tech IPO market for a few years, I don’t know what will?

    • Guest

      They wouldn’t be the first to buy their way into relevance or a stronger position. Instagram, while expensive, was a good move in that direction.

      Mistakes were made on the IPO but $20 billion is naive. I doubt you’ll see them fall below $50 b, even with the bad sentiment following this less than auspicious debut. And the ancillary IPO damage in tech, if any, will probably be restricted to social offerings.