Archive for September, 2012


How low can Facebook go?

Facebook’s stock is up to around $20, after the Tuesday interview of Mark Zuckerberg. It rose to about 8% after the interview and some days back it was down to around $17.7. The company’s value is down to about 50% of what it was at the time when its IPO was launched. Can it go any lower? I say yes, it will definitely go lower. But is underwriting by Facebook’s key Wall Street underwriters JP Morgan and Morgan Stanley hurting the market sentiment? I feel, it is more than what meets the eye. Facebook has been in trouble since a long time now and I had written about it long back.

All facts had been pointing in that direction. Of course underwriting hurts the share value big time, but there are more basic reasons that might be affecting the company’s stock value. Firstly, I would like to tell you that there are 2 more expirations due by November 17 which will result in an availability of over 58% of the total shares, that is about 1.58 billion shares.  With such amount of shares floating in the market, the share value is bound to go further down. Then, there are 2 lookups after November 13 that will liquidate the market with another 12% of the stocks. I have a feeling that the share price would drop to $7 by the end of this year.

The signs were clearly visible. As per the Distimo report, 2011-2012, Facebook’s app is no longer the most downloaded Social Mobile app. Facebook’s popularity is dropping in individual markets like Spain, Australia, China, Hong Kong, South Korea, Japan, Taiwan and Singapore. Another survey by eMarketer this year revealed that Twitter beats Facebook for Mobile Advertising Revenues, despite of Facebook’s earnest efforts to improve its advertising revenues.  There are other facts which state how the once famous and loved-by-all Facebook is in trouble. Though there are some endeavors being pursued by Facebook but will it be able to come back to its original share price. I sincerely doubt that.

Mirk,

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Every company wants to be social now and the concept of social enterprise, though not understood by many, is most spoken of these days. A social enterprise by definition is an enterprise that engage in new ways with its employees, customers and all the other stake holders. It builds its customers’ social profiles, enables enhanced conversation with its stake holders, monitors and analyses what people are saying and devise strategies to make use of that data. Well, this post is not about social enterprise, so let me stop here.

Instead, in this article I want to focus on how social media is aiding the psyche of the online shopper and how it is a becoming a handy tool for online retailers. Here are some rule that we have in real life and try to replicate in the virtual world. Social media aids us in doing that.

Consistency: We like to stay consistent. When we are faced with inconsistency we try to follow our past beliefs and behaviors. So purchases that have been made by us in the past reinforce our future shopping patterns. Even if expensive, 62% of online shoppers are brand loyal.

Scarcity: It is in our instincts to assign greater value to the products if we think they will be lesser available in near future. This is due to the fear of a potential loss that we might have to face. So we like to become members of social groups to receive exclusive deals. In a study 77% of the people confirmed that they like to get exclusive offers that they can redeem via Facebook.

Social Proof: When uncertain we look at what others are doing to resolve our personal insecurities. We ask for advice from friends and family before taking a purchase decision.  As per the study, 81% of the consumers have received advice from friends and family relating to a product purchase through a social networking site.

Reciprocity: We have an innate desire to repay favors. We do this to maintain social fairness even if those favors were invited or not.  We like to share updates and exclusive deals that we receive with people in our network. As per the study, every month 25,000,000,000 pieces of content are shared on Facebook.

In essence, I would like to conclude this article by saying that social media is helping shoppers make savvy purchases and retailers by embellishing their ability to listen to and implement changes in order to provide a tailored shopping experience.

Mirk

Sources (Socialcommercetoday.com, Squeakywheelmedia.com, interbranddesignforum.com)

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