Monday, May 14, 2012

Barron's: Why investors should skip Facebook's IPO

Amid fresh reports tonight that Facebook is upping the ante in this week's expected initial public offering, Barron's magazine reports the following; the mobile advertising worry applies broadly to Gannett, too, as it pushes forward with more mobile apps.

The biggest challenge for Facebook is to find ways to monetize the growing number of users who access the site on mobile devices. Smartphone screens don't lend themselves well to advertising. This is no small problem. A comScore report last week showed that U.S. Facebook users spent more time on the site in March using mobile devices than they did using PCs.

Facebook warned about the mobile-device issue in an updated securities filing last week, noting "we do not currently directly generate any meaningful revenue from the use of Facebook mobile products, and our ability to do so successfully is unproven." Facebook's mobile weakness could have driven its $1 billion recent deal to buy Instagram, which has a popular application that allows smartphone users to swap photos. But Instagram has no revenue.

Meanwhile, The Wall Street Journal is now reporting that the social network raised the price range for its IPO to $34 to $38 a share, from $28 to $35 a share, in a sign of investor appetite for the offering.


  1. Now the business world is talking about how much Facebook will be worth when it goes public.
    To know how Facebool IPO will affect Bay Area property value, come see this article:

  2. "Smartphone screens don't lend themselves well to advertising" is patently false. In fact, in some ways, they work better than web pages. There's not enough space to create the "ad blindness" phenomenon that plagues web pages, and the GPS functions of most cell phones mean you can target ads in ways that are very difficult on web pages and completely impossible in a newspaper.


Jim says: "Proceed with caution; this is a free-for-all comment zone. I try to correct or clarify incorrect information. But I can't catch everything. Please keep your posts focused on Gannett and media-related subjects. Note that I occasionally review comments in advance, to reject inappropriate ones. And I ignore hostile posters, and recommend you do, too."

Note: Only a member of this blog may post a comment.