Facebook: Act III

08/06/2012

Facebook: Act III

Facebook’s share price fell from $38 to $29 in two weeks but this doesn’t mean we are already witnessing the bursting of the social media bubble, says Prof. Javier Zamora. Facebook is a play in three acts, he says. First it accumulated the users, then it raised the capital. In the third act it will have to discover the right business model.

The recent weak performance of Facebook's long-awaited IPO has many speculating about the future of the social networking giant. Within two weeks of going public, Facebook's shares dropped from $38 a share and a valuation of $104 billion, to $29 a share and a valuation of $63 billion.
 
Rather than signal a bursting of the social media bubble, the IPO simply opened the last of three "acts" experienced by many start-ups, argues IESE Prof. Javier Zamora of the Department of Information Systems. During the first act, the company attracts users; in the second act, it goes public to attract capital; and during the third act, the company finally carves out the right business model, which for Facebook will mean going beyond diplay advertising.

Face IT - IESE Technology Blog