The Facebook’s Slow Growth

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Facebook is coming back one year later and they will try to get what they have lost with the IPO. It’s not about money, it’s about honour and respect for the largest network in the world. We all remember how one of the most expected IPO in the financial market ended. The half hour delay, the smiles and the nice faces, which soon turned to be shocked. It should have been the best day of their lives, because many of those first employees, cofounders and executives were turning millionaires and even billionaires.

Now, more than one year later, they are back for everything. The second quarter of this year reported outstanding records that weren’t expected not even from Wall Street whose estimate was about $1.62 billion. However Facebook replied with a $1.8 billion figure, which is a way greater that the expectations.

“We’ve made good progress growing our community, deepening engagement and delivering strong financial results, especially on mobile,” said Mark Zuckerberg, Facebook founder and CEO. “The work we’ve done to make mobile the best Facebook experience is showing good results and provides us with a solid foundation for the future.”

facebook stocks The Facebooks Slow Growth

Mobile is the way for the CEO, Mark Zukerberg, which now accounts more than 41% of Facebook’s revenues. This is probably why this company acquired three strategic startups focused on mobile before the IPO. With the raising of smart-watches, smart-glasses, a new generation of tables and phones, mobile seems the only thing that makes sense in the tech world. However the desktop market has still a huge audience, probably not in social media which is heading toward new technologies.

There is a huge difference between filling an excel spreadsheet and checking notifications. That’s why Facebook is winning on mobile, but it is also the reason behind many startups didn’t even consider to go on the desktop market. Look at Path, they don’t have a desktop version. Social Media Platforms are easy to check and update, people don’t need a big screen and a keyboard.

The next steps for Facebook are simple, they just need to keep working because they have got a lot of momentum, supported by the 1.15 billion of monthly active users, which won’t vanish in the next “lustrum“. What we wonder is if this company is still overvalued. The market capitalization is up to $100 billion for a company that has over than $5 billion in revenues per year. Isn’t that a small figure? The question is if the number of users that actually use your product is more important than the money you make.

What investors see is that with that user base, at some point, you will figure out how to make more money, but is it so easy to turn the Facebook’s business model into a money making machine? Maybe they need to look for something else by changing the way they make money. In the future the Ads market will die, thanks to the dozens of developers who are working on ad-blockers. Further videos ads, which seems Facebook is developing, are not going to solve the problem, but they will make it worse.

Social Networks are about engaging with people in the things you love, ads don’t do the job.

Edoardo Moreni

Blogger, Political Activist, Computer Scientist and Italian.