So why the stock market flop? In theory, buying stock in Facebook seems like a pretty good idea. More and more people must be making new Facebook profiles every day, and the company is surely bombarded with offers including everything from advertisement space to testing the newest online game.
Also, Facebook isn’t some marketable resource that can be lost or cut off overnight like oil from the Middle East. For better or worse, Facebook is sticking around far into the foreseeable future. All in all, stock in Facebook sounds like a reasonable, sound, worthy investment. So again, why the flop?
I think that one big reason that Facebook’s stock didn’t take off the way Farmville did is because of a lack of room for upward growth. Facebook is already overladen with advertisements, and you can drown in a sea of pointless applications and games.
The number of Facebook profiles, like the population of people capable of making Facebook profiles, is probably fairly consistent, with no dramatic increases or decreases in number. This all spells out a story of little or no growth, and in the ever-changing world of the stock market, growth equals profit.
That’s what everyone’s after, right? It’s all about the dough. Apparently, not enough people thought that Facebook would make a good investment. Its stock market debut ended up less a cause for celebration and more an embarrassingly public admittance of the website’s stagnancy.
I think that the translation of Facebook’s value into stock was a bad idea from the beginning. It’s bad enough that droves of people waste hours of their day surfing the website, filling their minds with a plethora of misspelled status updates and pictures of people that they don’t even know. Did Facebook really have to pursue this endeavor to make even more money out of the lackadaisical time-wasting of the masses?
This was a failed dive into the shallow and sensitive pool that is the stock market smacked of greed, and it also seems just plain reckless. If you have watched even five minutes of CNN or Fox News, then you most likely have heard reports on the stock market. Even if you understood only every other word coming out the analyst’s mouth, I’m sure you took away at least one lesson: the stock market is a mysterious, temperamental and fragile thing.
Facebook’s attempted venture into the world of stock options (a world whose only spoken language is comprised of a meaningless clamor of mixed shouts to “Buy!” or “Sell!”) had the potential to upset the market’s tentative balance, and as I’m sure you’ve all noticed, an upsetting of the stock market can have disastrous consequences.
Also, creating stock in Facebook has the potential to lure inexperienced investors into risking their hard-earned money. Such an investor might look at the stock market, see Facebook — a brand that he recognizes, a website that he logs onto multiple times a day — and think, “Hey, I know about that. I can totally do this stock market thing.”
Sure, that’s a bit of an over-dramatization, but I’m sure you can see how stocks in something like Facebook might evoke a casual attitude towards purchasing such stocks, an attitude that could prove disastrous to an inexperienced investor.
All said, I think that introducing Facebook to the stock market was a bad idea from the start. In my opinion, Facebook should just stick to what its best at: hosting addictive video-games and helping people waste time.
Spencer Grimes is a fourth-year English major. He can be reached at email@example.com.