Zuckerberg’s Remarks Give Facebook Shares a Boost — But Can He Deliver?

On Wall Street, confidence in corporate management is crucial. Zuckerberg outlined his strategic vision. Now, Facebook needs to execute.

  • Share
  • Read Later
Max Morse—Getty Images

Facebook CEO Mark Zuckerberg speaks to the TechCrunch Disrupt SF 2012 conference in San Francisco, Sept. 11, 2012.

After three months of radio silence from top Facebook executives following the company’s controversial IPO, CEO Mark Zuckerberg’s bullish comments at a San Francisco tech conference sent Facebook shares soaring 8% Wednesday. For Facebook investors, who’ve watched the company’s share price plummet by nearly 50% since the IPO, Zuckerberg’s remarks were a welcome expression of confidence by the social networking titan. In his first public comments since the IPO, Zuckerberg acknowledged that Facebook’s stock performance “has obviously been disappointing,” potentially causing some employees to leave. But, he said, he hoped his troops will “double down” on the future of the company.

And let’s face it: Despite the disastrous IPO and subsequent stock plunge, Facebook has a lot going for it. The company has nearly 1 billion users, $10 billion in the bank, and it dominates the social networking space. But despite those advantages, Zuckerberg portrayed his company as an underdog, which isn’t actually far off-base, given the criticism the company has faced after years of hype and soaring expectations. “I would rather be in a cycle where people underestimate us because I’d rather be underestimated,” Zuckerberg, 28, said in comments at the Techcrunch Disrupt conference after the close of the stock market Tuesday. Facebook shares have fallen by nearly 50% since the IPO, wiping out some $50 billion in shareholder value, including nearly $10 billion from Zuckerberg’s net worth. (He’s still worth over $10 billion, so it’s hard to feel too sorry for him.)

(MORE: Facebook Blame-Game: Who’s at Fault for IPO Debacle?)

Addressing concerns about the company’s mobile strategy, Zuckerberg emphasized that optimizing its service for mobile devices is the top priority. In the weeks before the company’s IPO, Facebook disclosed that its users are increasingly accessing the service on mobile devices, and warned that it might be more difficult to make money off those users than those who access the service through its traditional desktop platform. But this week, Zuckerberg sounded a bullish note on the company’s mobile prospects. Specifically, he said that the company’s mobile users spend more time on the service, and are more likely to log-in daily. “I think it is really easy for folks to underestimate how really fundamentally good mobile is for us,” he said, though he acknowledged that Facebook “burned two years” by relying on a coding protocol known as HTML 5, which turned out to be a bust for the company.

Zuckerberg reiterated that Facebook is on a mission to make the world “more open and connected,” but in a nod to Wall Street, he emphasized that the company needs to make money in order to pursue that mission. He took pains to point out that the company’s mission and its business success are not mutually exclusive. In fact, the company needs to execute in both areas in order to be successful at either one of them. “Building a mission and building a business go hand in hand,” Zuckerberg said, according to a transcription of his comments by Forbes. “The primary thing that excites me is the mission. But we have always had a healthy understanding that we need to do both.”

In a bit of news, Zuckerberg shot down speculation that Facebook is developing its own mobile phone, calling that “the wrong strategy for us.” For months there have been rumors that Facebook would build its own mobile device, but Zuckerberg tried to put that notion to rest. “We’re building this network of 950 million users,” he said, according to the Forbes transcript. “Let’s say we built a phone, maybe we could get 10 million or 20 million people to use it. That doesn’t move the needle. We want to build a system that is, as deeply as possible, integrated into every device. We have three mobile platforms: mobile Web, Apple’s iOS, Android.” (Android is Google’s wildly popular mobile operating system.) Zuckerberg said that he “basically lives on his mobile device,” adding that he wrote his 2,000-plus-word Founder’s Letter — in which he laid out the company’s social mission — on his phone.

(MORE: Facebook Hits Record Low as Insider Stock Sale Lock-Up Period Ends)

In one of his more eyebrow-raising comments, Zuckerberg discussed plans to compete with web titan Google in the search space, which Google dominates. “We do on the order of a billion queries a day, and we’re not even trying,” he said, referring to the searches Facebook users conduct on the site, primarily looking up names of people, although a small portion of searchers are apparently looking for company brand pages. (He later clarified that he was being “facetious” with the “not even trying” quip.) “I think search is evolving to provide specific answers,” he said. “Facebook is pretty uniquely positioned to answer most of the questions people want to ask, like ‘What restaurants do my friends like?’” Noting that Facebook has a team working on search, Zuckerberg called it “an obvious thing” for the company to focus on more in the future.

Facebook’s shares soared nearly 8% Wednesday in the wake of Zuckerberg’s remarks, and influential Wall Street analyst Ben Schachter greeted the young CEO’s comments warmly. “It was good to see Zuckerberg publicly present, and we think it is critical for investors to hear more directly from him,” wrote Schachter, an analyst at Macquarie Capital. “While none of his comments led us to change our financial model for the company, better understanding Zuckerberg’s priorities, motivation, and general focus is a positive for investors.” Schachter added: “We thought his comments regarding search over the longer-term were the most noteworthy of the presentation and will drive more discussion about a potential search revenue stream for Facebook while reigniting some concern about increased competition for Google.”

In past public appearances, Zuckerberg has occasionally appeared nervous and awkward. But not this time. It finally feels like the CEO is growing into his role as chieftain of one of the most important tech companies in the world. Facebook still needs to string together a run of successful quarters, but investors should be relieved by his performance this week, especially considering recent speculation about whether Zuckerberg has what it takes to lead a multi-billion dollar public company. On Wall Street, the psychological value of confidence in corporate management must not be underestimated. Facebook shareholders no doubt breathed a sigh of relief watching Zuckerberg’s performance, which should make progress allaying concerns about his leadership. Zuckerberg laid out Facebook’s strategic vision. Now, the CEO and his company need to execute.

24 comments
Ziyasharma
Ziyasharma

Situated right near the sea, our Hotel is a stone structure built and decorated completely in an antique style. 
It has a tranquil and peaceful environment where you can relax and feel revived under the cool shade of the olive trees

assos tatil

amitykunal
amitykunal

best-seo-techniques2013

This time to show and advertisements .in this era everybody want to get more and more success in our life .so we should participate the in the race and try to be win .

Webstats Art
Webstats Art

Most commenters here never owned access to 1 Billion users and don't know what it implies. Facebook is not going down at all. If anyone cared to take a look at Alexa rankings for most popular site, then they should of noticed that Facebook has overtaken google in the last few months as the most popular website in the world. Thats right! Facebook is beating google hands down!

Behti Muhtarov
Behti Muhtarov

Hi,Mark,I am  writing to you just to make a suggestion.As far as I know Facebook is loosing its share on the International bourse.I would like to share my idea how to improve this.What I think it might get a success is:why don't you think about getting a health service histories of the wide world people on Facebook so all the doctors can get an information at any time and place of the world if they needed.This of course would be not for public share but only for registered doctors,  has to be with a security code or something safe but at the moment there is not an idea like this. so in my opinion all the governments would support that one.

I will be really happy if that would help you to improve the situation at the moment and I will be happy to help with new ideas as well.

I will be waiting to hear news from you.

SAP Training
SAP Training

This is going to be a temporary thing since the investors liked what they heard.  However, its already a misstep to invest on fb after its initial novelty and to keep it there to lose more? No way.  (thinking about switching brokers. Hahaha -- kidding, Dave!) 

ByeByeCons
ByeByeCons

Can he deliver? No. Facebook is not worth its valuation. This is just another bubble created by irrational gamblers, err...investors, looking to cache in.

18235
18235

he's just a dumb kid who got very lucky (partly thanks to stealing ideas, too) ; a one trick pony.

Wartface
Wartface

Owebama will take the profits from the investors... He needs more and more of that free OWEbama money!

j2hess
j2hess

One of the most important tech companies in the world????

Say you're kidding.

Hina Naz
Hina Naz

Nothing can be said at the moment.. Time will prove it as it done previously. IPO still vague but proper business strategy can make a big difference..

Music66
Music66

Zuckerburg was the frontman for the nationwide hyping prior to the IPO... what's new?

jonathanhakim
jonathanhakim

With the optimistic headline, I really thought Zuckerberg had actually said something.  But the stock is going up just because the already overconfident 28-year-old billionaire "feels good" about Facebook's future?

joey__19
joey__19

if  i'm no longer bored, i'll have to cancel my facebook account.

Matt A. Myers
Matt A. Myers

The valuation and projections still don't match reality. People seem to forget competition exists, and Facebook seems to think they can keep trying to control things, and that people will want to be on their platform long-term. In reality even for businesses the chances of people seeing your content isn't very high - of course one model being that Facebook wants you to pay to increase that exposure. It's just not the best possible structure for businesses, or consumers. Sure, it might be good enough for now, and all that exists in a good enough form for people to use - however I imagine better systems will evolve, and Facebook won't be able to buy them for $1 billion (or ~$300 million + stock, whatever it was).

omegafrontier
omegafrontier

Am I the only who thinks this guy is a douche?

northofthere
northofthere

After a 50% drop an 8% rise is hardly soaring.

Rehanfazal Rehanfazal
Rehanfazal Rehanfazal

 rehanprince nothing can be sad at the moment                                                                                                                                                                                                    gggfggggggggggfgffffffffffffffgffffffffffffffffffgffffffffffffggggf

Rehanfazal Rehanfazal
Rehanfazal Rehanfazal

 rrfgrgrgfgrhggfdghfthrgsdhyshshydtjfgfsygfvjsgvkjhytuyhkyiykjnklkhjhlsjlsdhfvigkhdsfbvidfbidhfbisualihgkjhaglihiugyifuhgahkiughhduyytuifhgsatutgdfghaskthfuasygiluyhiluygiuyiuyuiy y6 yyguggjguufgfhjddiihjvyhfyyrfgrgfhfyhfghhfhdhfhhfdhfdyfdufduu

Matt A. Myers
Matt A. Myers

It's more of a desperate response from people who don't know any better, and who react based on what sounds good.

Kimberley B. Buteau
Kimberley B. Buteau

I quit working at shoprite and now I make $35h - $80h...how? @j2hess:disqus I'm working online! My work didn't exactly make me happy so I decided to take a chance on something new… after 4 years it was so hard to quit my day job but now I couldn't be happier. Heres what I do, http://Ace16.com