Mark Zuckerberg soothed investors in his first major public appearance since the No. 1 social network’s rocky May IPO, breathing life into its struggling shares after hinting at new growth areas from mobile to search. The 28-year-old co-founder looked confident in a gray T-shirt and jeans, asking Wall Street to be patient as the company developed new products, addressing issues such as employee morale, and dashing rumours that Facebook may build a smartphone.
Facebook became the first US company to debut on stock markets with a value of more than $100 billion. But it has since lost more than half of its stock market value as investors fret about slowing growth and the company’s challenges in making money as users shift from PCs to mobile devices.
Zuckerberg, who has himself lost billions of dollars on paper since Facebook’s market debut, admitted to disappointment about his company’s crumbling share price, but argued Wall Street has yet to grasp the full potential of its fledgling mobile business. His comments helped drive Facebook shares up more than 3 percent after hours to above $20, building on a 3.3 percent gain in regular trade on Tuesday. The stock is still well below its $38 debut price.
New products in sight
Speaking at the TechCrunch Disrupt conference in San Francisco on Tuesday, Zuckerberg highlighted the company’s progress in mobile over the past six months and its potential for growth. Facebook’s recently released mobile ads are already delivering better results for advertisers than the traditional “display” ads that appear on the right-hand side of the social networking service on PCs, Zuckerberg said. “One of the main things that I think is misunderstood right now is how fundamentally good” the company’s mobile prospects are, he said.
While declining to offer details, Zuckerberg hinted that the company was halfway through a cycle to “retool” and offer new advertising products. He also said he believed search could be a ripe area of growth for Facebook and was working to offer a competitive search product. Facebook has a team working on the social network’s existing search feature, which already garners roughly one billion queries every day, Zuckerberg noted. But at some point he said Facebook would focus its efforts more intently on developing a full-featured search service, which he described as a “big opportunity”. Zuckerberg, who wrote in the IPO prospectus that the company has always cared primarily about its “social mission,” has kept a low public profile as the stock has crumbled in the months since the IPO.
Having recently committed not to sell his own shares for at least 12 months, Zuckerberg conceded that the company’s downward-spiraling stock was not helping staff morale, but stressed he still thought it was a good time to join the company and “double down”. “It’s not like this is the first up and down that we’ve ever had,” he told hundreds of attendees at the conference. “I would rather be in the cycle where people underestimate us.”
No Facebook phone
While Facebook has taken a beating on Wall Street, some of the Internet industry programmers, entrepreneurs and investors who packed the aisles to watch Zuckerberg’s roughly 30-minute talk said their faith in the CEO and the company was not shaken. “This company is about vision and changing the world and I don’t know who would be better prepared to lead it than the guy who had that vision and built the company to a profitable multibillion dollar company before his 30th birthday,” said Dave Crowder of GSV Asset Management, which owns Facebook shares.
Zuckerberg acknowledged that he had erred years ago by using a programming language that slowed the development of Facebook apps for Apple and Android phones. “Probably we will look back and say that that was the biggest mistake, the biggest strategic mistake we made,” he said of the company’s decision to create mobile apps using open web standards instead of building apps specially designed for iPhone and Android smartphones. But he again quashed a years-long rumour that Facebook is wading into the hardware business and developing a branded phone. Building a smartphone would be “clearly the wrong strategy for us,” Zuckerberg said.