Business Technology

Saturday 25 November 2017

Facebook to face down critics over growth concerns

Getty Images
Getty Images

Brian Womack

FACEBOOK will get its first crack on Thursday as a public company to allay the growth concerns that have made it the second-worst performing US technology initial public offering of 2012.

The shares have tumbled 24pc since Facebook, the largest social-networking service, held a May 17 IPO marred by technical glitches and signs that its price was set too high.

Executives, probably including chief financial officer David Ebersman and chief operating officer Sheryl Sandberg, will hold a conference call on Thursday to discuss second-quarter results.

"This call is really critical for this company," said Paul Argenti, a US professor of business "This is going to be an opportunity for them to really make a difference in terms of their investor relations strategy and set the record straight.

"They need to gain that momentum back and the exuberance that they lost as a result of the IPO."

The call, at 5pm New York time, gives management its first chance since May to make a case that Facebook deserves a higher price relative to earnings than 98pc of the Standard & Poor's 500.

Shareholders will seek assurances that the firm can keep users engaged amid competition from Twitter and Google, and that it can overcome challenges in making money from mobile device advertising.

AVG Technologies, a maker of security software, has dropped 33pc in US trading since it sold shares in an IPO this year.

Analysts are predicting that Facebook's sales rose 30pc to $1.16bn in the June period.

That would be the slowest growth rate yet disclosed by the company co-founded by chief executive Mark Zuckerberg in 2004 in a Harvard University dorm room.

Mr Zuckerberg played a lower profile during pre-IPO marketing meetings, and may opt out of the call.

However, most industry people believe Mr Zuckerberg would provide valuable insight into the company's vision and that shareholders will want to hear from him.

"Zuckerberg should show up on the call, not necessarily to read the income-statement stuff, but to simply come on and make some strategic remarks and be available to answer some strategic questions," said John Palizza, a senior US business college lecturer.

Irish Independent

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