Facebook Inc (NASDAQ:FB) jumped to over $34 last week, marking the first time since its IPO that the stock has traded that high. This came after a one-day climb of nearly 30%.
A great one-day move, right? But let’s put it in perspective: Since its May 2012 IPO, FB is still down more than 3%.
The social network blew through both earnings and revenue expectations. Second-quarter earnings per share came in at 19 cents, compared with the consensus forecast of 14 cents and the 12 cents a share posted during the second quarter last year.
In reality, all of Facebook Inc (NASDAQ:FB)’s numbers were up big-time: Total monthly active users were up to 1.15 billion, up 20% year over year; mobile monthly active users were up to 819 million, up 51%; and daily active users were up to 699 million, up 27%.
The real gem? Mobile ad revenue came in at $656 million, up 76% from the previous quarter. Mobile ad revenue now makes up 40% of total ad revenue, compared with 30% of total ad revenue during the previous quarter.
Many investors believe that Facebook Inc (NASDAQ:FB) has finally hit the turning point and figured out how to monetize mobile. However, the question is, what’s next? The company appears to have a lot of growth priced in, trading at a trailing price-to-earnings (P/E) ratio of 174, a price-to-sales ratio of nearly 15, and an enterprise value-to-EBITDA (earnings before interest, taxes, depreciation and amortization) multiple of 27.
Even with this expected growth priced in, the company has an opportunity for serious upside. It’s simple, really.
Replace Mark Zuckerberg as CEO.
|Is Mark Zuckerberg holding back Facebook’s growth?|
There’s a serious problem with keeping the founder as CEO once the company goes public. Running a public company is very different than running a startup. There are different challenges and goals, as well as the challenges of a shareholder mentality. As a startup, you’re accountable to yourself and venture capitalists — but as a public company, your shareholders look very different.
Unlike venture capitalists, who are more interested in product building and revenue growth, shareholders in a public company are much more interested in earnings. Many startups are accustomed to burning cash at rapid rates and losing money on an earnings basis. A new Facebook Inc (NASDAQ:FB) CEO with public company experience could be just what shareholders need to really launch the stock.
While there are founder CEOs who have gone on to have great careers, the trend of late is that publicly traded companies have performed better under a CEO with previous management experience at other public companies.