FaceBook UnFriends Its Fan Base -- CEO and Execs out on Spending Sprees while FB in crisis [View all]

[KurtNYC]

What should have turned into an historic day for the post-recession IPO market has turned into a calamity. Facebook, Inc. is a business based on leaving its users “feeling good.” Feeling good about interacting with family, friends and colleagues, and feeling good about finding products, services and stories that may interest them and therefore enabling the company to bank some advertising money.
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Had Facebook stuck with its original IPO price, today would have been another day at the office, as shares are trading right in that range. No one would really be paying attention and the headlines and message boards would be bright with speculation and predictions for the future.

Instead, because these guys HAD to milk those few extra bucks out of the little guy, negativity surrounds the company like never before and the loyalty of the customer base is threatened for the first time ever, at least on this scale.

http://marketplayground.com/2012/05/23/facebook-nasdaqfb-unfriends-its-fan-base/

Great piece. He argues against the lawsuits and correctly analyzes the current state of affairs at Facebook. I would go a little further: Facebook is in crisis right now. It is like the bus driver collecting everyone's fare and then jumping out while the bus is rolling and leaving no one driving. The naked greed of this IPO and the way it actually went down has created a PR crisis and no one is answering the phones at FaceBook.

FaceBook revenues were down in the last period and then last week, right before the IPO, GM very publicly said it would not spend another $10 million on FaceBook ads because they didn't perform. The "feel good" stuff in the linked article is right on target. That is what Facebook has delivered successfully for years. Last year, as their parents became dominant on FB, the kids left. They use Twitter now -- less potential for your parents to stalk you online and embarrass you (or shoot your laptop). The kids were the more valuable demographic to ad-revenue-based business model.

For those who put doubts aside and trusted that Zuckerberg was a wonderkind, a visionary on the order of Steve Jobs or Larry Ellison, there should be no illusions now. The $1 billion purchase of instagram was a signal that Zuckerberg was out of ideas and his current absence at the helm is confirmation that he knows it. Fake it 'till you make...and then run off when the shit hits the fan. I don't care how old he isn't or what he wears to work (when he goes) but leadership like that is not worth even $5 billion in market cap.

This IPO reminds me in ways of Krispy Kreme. The donuts were very popular and there was a 'good feeling' about the company among small investors because they knew and liked the product. Krispy Kreme went down in scandals and finished as a penny stock.