A year after a nightmarish share offering, Facebook still has its ardent backers and detractors.
The
world's biggest social network, which now has more than 1.1 billion
users, has managed to boost its earnings since the initial public
offering, including from its mobile platform, important in countering
its critics.
The IPO on May 18 last year
sparked a series of crises for Facebook, with the shares plunging from
$38 to as low as $17.73 in September.
Shares closed at $26.13 on Thursday.
A
year ago, the company faced doubts on whether it could boost revenues
and adapt to the shift to mobile computing. The IPO also sparked
accusations on whether investment banks withheld key data, and a trading
glitch led to claims of tens of millions of dollars in damages against
the Nasdaq exchange.
Since then, however,
Facebook has lifted its profits, and boosted the mobile segment to 30%
of ad revenues in its most recent results, which generally beat Wall
Street estimates.
Facebook's share price has
stabilized in a range of $25 to $28, and even some of its early critics
are offering grudging praise.
"It has a better
strategy. It seems a little more mature," said Trip Chowdhry at Global
Equities Research, a skeptic at the time of the Facebook IPO.
Chowdhry
has an "equal weight" rating and a price target of $28, suggesting
Facebook has some potential to rise if it executes well.
"Facebook is the undisputed leader in the segment. Nobody even comes close," Chowdhry told AFP.
He
maintained that Google+, the social network from Facebook's Silicon
Valley rival, "has not put even a single dent on Facebook."
Still, the analyst is cautious on Facebook, saying it needs to keep innovating to find ways to keep users engaged.
"They can't be too greedy," he said. "They need to put product before monetization."
Chowdhry
said that if Facebook goes too heavy on ads, it will turn users away
"and they could become the next MySpace," the failed social network
which led the sector before Facebook.
Some
analysts remain lukewarm about Facebook because of its high
price-earnings ratio -- Wall Street measure of share price against
profits. Even with optimistic profit projections, Facebook's ratio is
around 70, compared with around 27 for Google and 10 for Apple.
Analyst
Stephen Ju at Credit Suisse said Facebook delivered "solid" results and
"our bias remains positive," but that shares "are already reflecting
the near-medium term benefits" of its recent efforts.
Nicholas Landell-Mills at Indigo Equity Research said it was hard to know if Facebook's high price is justified.
"Facebook is still evolving and many products are still at an early stage of development," he said in a research note.
"Facebook needs to revolutionize online display ads to raise ad returns and prices."
Lou Kerner, manager at The Social Internet Fund and a longtime Facebook bull, said the company is "executing quite well."
"They've
come up with better mobile apps that people engage with, and they have
shown some ability to monetize that," Kerner said.
In
the past year, Facebook has ramped up its advertising efforts,
especially for mobile, has tweaked its News Feed and launched Graph
Search, a way to find postings within the network. It has also launched
its own smartphone platform called Home which puts Facebook on the start
screen for Android handsets.
Kerner said that
as Facebook has matured, "it isn't cool anymore" but that many people
need to use it to connect with friends, brands and celebrities because
of its reach.
"You can connect in a way that you can't anywhere else," he said.
Even though investors remain cool about Facebook, Kerner said he remains "very bullish."
"The
market has never seen something like Facebook and I don't think people
have had a chance to evaluate the risks and the opportunities of
Facebook," he said.
"I invest in companies that leverage the Facebook platform and those companies are doing very well."
Independent
technology analyst Jeff Kagan said, however, that Facebook has flopped
with its new mobile phone platform and has yet to prove it can deliver
enough profits to justify its share price.
"The magical Facebook brand has never materialized," he said.
Kagan
said Facebook faces a conundrum because it has failed to take steps to
adequately monetize the vast amount of customer data it has, but that
"if they do that it will turn people off."
Richard
Greenfield at BTIG Research said Facebook faces a real threat from
Google+, saying it is "methodically drawing consumers and businesses"
into its ecosystem.
"While many view Google+
as a failure because consumers do not actively update their friends...
we view Google+ as a direct attack on Facebook's control of your online
social identity," Greenfield said.
"Google is
rapidly enhancing the value to consumers of the Google+ social identity,
given its control of search, mapping, Android.