Facebook’s (FB) IPO was a disaster. From an IPO price of $38, FB’s share price value promptly plunged to a low of $17.73 within four months. Since then, however, the stock has risen over 60%.
Facebook faces some fundamental business issues. So far, the company has not been able to monetize mobile users, a consumer segment that is vital to the financial performance of the company. "The company still keeps poking around and testing new ways to generate revenue." wrote Dan Lyons of ReadWrite.
"Facebook's long-term problem is that it is trying to make money via advertising, even though Facebook simply isn’t a very good vehicle for advertising. And while there are things Facebook could do to make itself into a nice platform for advertisers, those things would drive away members. That's the conundrum." added Dan.
The company is expected to grow its revenue by at least 30% per year for the next five years. As a result of an impressive third quarter, some analysts have raised their expectations for FB. As reported on Investors.com, BMO Capital Markets analyst Daniel Salmon is forecasting a reacceleration of advertisement spending as big brands return for mobile reach and more video ads. He expects FB's financial numbers to beat stock analysts' expectations and increased his rating on FB stock from underperform to outperform.
Even though Facebook had a rough start, it still looks like a good buy as the stock appears to have found its footing. Investors buying Facebook stock should focus on long term growth instead of looking for quick returns.