Facebook Inc. (FB) Falters, Foibles the Fault of Zuckerberg?


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Facebook Inc. (NASDAQ:FB), in many ways, doesn’t get to where it is without its dynamic and young creative leader, Mark Zuckerberg. In other ways, Facebook is exactly where it is with the green-behind-the-ears, dictatorial and seemingly inflexible Mark Zuckerberg. The contrast is striking, and one that befits a company that is so ubiquitous in its cultural presence yet so mired with few adequate revenue streams and a stock price that is 50 percent of its former self (and still dropping).

Facebook Inc (FB), JetBlue Airways Corporation (JBLU)

Facebook Inc. (NASDAQ:FB) is truly a complex company with a complex leader, and one story from the Los Angeles Times begins putting into the public what perhaps many investors have privately wondered – would Facebook be better if Zuckerberg stepped aside as chief executive, giving the role to someone more experienced in running a multi-billion-dollar company, and he focused more on being the creative, outside-of-the-box innovator he has been in order to move the company forward?

“There is a growing sense that Mark Zuckerberg, talented though he may be, is in over his hoodie as CEO of a multibillion-dollar public company,” said Sam Hamadeh, head of PrivCo, a research firm. “While in many cases a company founder can, and does, grow into the job, things are happening so quickly that there is precious little time here for Zuckerberg to do that.”

While Facebook Inc. (NASDAQ:FB) does have board of directors and every investor has a vote in the company, Zuckerberg still is the majority shareholder – and when the CEO, president and founder of the company holds more than 50 percent of the shares, he pretty much finalizes every decision that is made, regardless of the other shareholders. That is why many blame Zuckerberg for the stock’s poor performance in the three months since the IPO. Some say his first mistake came when the company was valued (primarily by him) at $100 billion at the time of the IPO.

“This was the most anticipated IPO in many years and it was like an exploding cigar,” said Barry Ritholtz, of Fusion IQ, another research firm. “Every investor thought they were about to become wealthy beyond their wildest dreams, and they had this blow up in their face.”

To be fair, Zuckerberg does get credit for driving up revenue 32 percent year-over-year in the first-ever Facebook Inc. (NASDAQ:FB) quarterly report as a public company, and he couldn’t be necessarily blamed for slowing growth or increasing costs to run the company, which come with the territory of growth. If Facebook Inc. (NASDA:FB) can truly unlock the mystery of monetizing mobile advertising, then Zuck could truly prove his ability, and Facebook may reach its potential – the one Zuck seemed to set back in May.

While those who were into Facebook Inc. (NASDAQ:FB) stock from the beginning, the 50-percent drop in price is bad news. But now is perceived to be bargain time for certain hedge-fund managers, as it has been widely reported that billionaire hedge-fund manager George Soros of Soros Fund Management recently bought a stake in Facebook (see his portfolio).

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