Facebook’s familiar catchphrase is ubiquitous, but can their dominance of the social realm last?
Facebook switched its company status from private to public last Friday, offering stock for purchase on the NASDAQ market at an initial price of $38 a share. It was the largest internet IPO of all time.
This morning, Reuters is reporting that the stock has fallen below $34 after just a few hours of Monday trading.
It’s cause for concern among investors and those responsible for setting the IPO price as today is the first day where heavy underwriters such as Morgan Stanley were not supporting the stock by buying large quantities.
From the Reuters article:
As the stock fell, there was a long list of questions — ranging from whether the underwriters priced the shares too high to how well prepared the Nasdaq was to handle the biggest Internet IPO ever — and few immediate answers.
“It was just a poorly done deal and it just so happens to be the biggest deal ever for Nasdaq and they pooched it, that’s the bottom line here,” said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.
It’s also cause for concern for broader California.
In any debate over just how friendly California’s business climate is, or whether we are stimulating market innovation enough as a state, or why California’s ranking among world economies has slipped from 6th to 9th in the past decade, the go-to safety net response is always “well, we have Google, Apple and Facebook.”
The first two are the undisputed heavyweights of the tech sector. They have been publicly traded companies for years and their stock prices hold steady at level other CEOs can only dream about. As of writing, Google’s price is at about $610 a share and Apple’s is hovering at $550.
It was many’s hope that Facebook would follow suit and generate a massive windfall in tax revenue for the state coffers with the IPO.
Now, like much in this state, what was once unbridled enthusiasm must now be tempered with a cautious wait-and-see approach.
Sounding the death knell for Facebook is absolutely premature. They have a foothold in many arenas that MySpace never touched, even at its apex. Facebook is the hub for much of the first-world’s branding, both personal and corporate, and that dynamic has been ingrained in a new generation of youth as second nature.
Furthermore, Facebook is still adding users at an exponential rate across the globe, and where there are eyeballs, there is growth potential.
However, in the larger context for the state, reliance on any one darling or one sector even is a poor strategy to secure the state economically for the future. This comes to mind when thinking about the Amazon sales tax debate or the distribution plant they will build that is being touted as a big win for the state.
Look no further than the website for the California Economic Summit to see how Californians are taking a much more holistic, grassroots effort to mending the states ailing economy without reliance on any one person, company or idea.
Chris Nelson is the editor of the CAFwd blog and a Social Media + Content Specialst for California Forward
