Often there is a misconception about the relationship between the status and health of a particular company and its’ share price. Ryan Un in his blog recently noted that as Facebook’s share price has nearly halved since its IPO, the company’s revenue’s have also fallen. This could be farther from the truth. Investors had difficulty valuing Facebook, because simply another company of its size, and in this sector of the market does not exist. P/E ratios and profit margins are difficult to compare with other technology companies such as Google and Apple, as they are entirely different.
Facebook’s marketing customers have re-evaluated the relationship, and company’s including General Motors dropped Facebook. General Motors has now come back to Facebook to negotiate a new deal. Since the IPO Facebook has actually increased revenue, and better positioned itself to grow in the future. A new mobile app platform has allowed Facebook to tap into mobile advertising revenue. As well, Facebook most recently launched a gift service that allows users to send items to others users. This service allows Facebook to compete with Amazon and others. Facebook does not need to recover, the company has only bettered itself internally since the IPO!