Could a Lack of Ad-Clicks Damage Facebook's IPO?

By

As with any soon-to-be-public company, Facebook is being scrutinized from every angle by analysts and potential investors attempting to identify cracks in the seemingly-invincible social networking giant.

On the heels of its relatively meager first quarter earnings report, where it posted revenues of $1.058 billion – up 46 percent annually but down six percent from the previous quarter – Facebook is now being forced to defend against an ominous survey that suggests its greatest moneymaker, advertising, may not be quite the asset we once thought.

A recent AP/CNBC poll found that nearly 60 percent of Facebook users admit to never having clicked on an ad or other sponsored content when on the site. What's even more concerning is only four percent of users peruse ads on a regular basis.

Compounding this problem is the fact that, like most Web companies, Facebook generates the vast majority of its revenue from advertising. Couple this with Facebook's dwindling average revenue-per-user, and we could be looking at a legitimate red flag.

Sensing the need to spread its wings beyond advertising, Facebook has started building up its e-commerce platform to create a second revenue-generated staple. But this too faces public resistance, says CNBC.

Nearly 55 percent of respondents said that they wouldn't feel comfortable using Facebook to conduct financial transactions. Only 8 percent of those surveyed feel Facebook would be a "very safe" or "extremely safe" e-commerce platform.

What's more, only 18 percent of respondents are very confident in CEO Mark Zuckerberg's ability to run a publicly-traded company.

At first glance, it seems that user distrust and a less-than-glamorous Q1 performance have done nothing to temper investor excitement over Facebook and its looming IPO. The social network increased the target price range for its upcoming initial public offering on Tuesday from $28-$35 per share to $34-$38 a share.

The new target range values the company between $92 billion and $103 billion. One source close to Facebook told CNN Money that the IPO response has been "nothing short of pandemonium."

CNBC's poll paints a slightly different picture, however, as only 3 percent of respondents believe that Facebook is undervalued at a $100 billion valuation. Approximately 62 percent of respondents who are active investors believe the company is overvalued at that number.




Edited by Braden Becker
Get stories like this delivered straight to your inbox. [Free eNews Subscription]

TechZone360 Contributor

SHARE THIS ARTICLE
Related Articles

Enhancing Cybersecurity Measures for Modern Businesses

By: Contributing Writer    7/2/2025

Cyberattacks are rising, and businesses of all sizes feel the pressure. Small companies often think they're too small to be targets. They aren't. Hack…

Read More

Lessons Learned from Enterprise Oracle Cloud Migrations

By: Contributing Writer    7/1/2025

Switching to Oracle Cloud can feel daunting. Security risks, unexpected expenses, and performance troubles often turn what seems like an effortless up…

Read More

Protecting Business Assets with Smarter Security Frameworks

By: Contributing Writer    7/1/2025

Protecting your business is more challenging than ever. Cyber threats are increasing every day. Hackers target small and large businesses alike, searc…

Read More

Emerging Trends in Technology and Their Impact on Future Innovations

By: Contributing Writer    7/1/2025

Technology is changing faster than ever. Business owners often struggle to keep up. What's trending today might be outdated tomorrow. Falling behind c…

Read More

Tech Podcast Award Winners Bring Excitement and Enthusiasm to a Range of Important Tech Topics

By: TMCnet Staff    6/18/2025

Tech Podcast Award winners produce engaging, informative, and often entertaining content, bringing valuable insight from industry front lines to the e…

Read More