Facebook (NASDAQ:FB) has picked so much low hanging fruits, the company appears almost desperate to provide investors a post-IPO. Before the IPO, CEO Mark Zuckerberg decided to bet $1 billion on photo-sharing tool Instagram. Now, the world’s largest social networking platform is targeting pre-teens to help boost slowing user numbers.
What do investors think about another strategy focused on user acquisition as opposed to monetization?
Facebook investors are plenty satisfied with the over 900 million users at the sovereign nation-sized social media platform. The issue at hand now is whether Facebook has a viable plan to make money in exchange for the value they supply their users. Unfortunately, at this stage in the company’s life cycle, maintaining a primary focus on user acquisition sends a signal to investors that the company may have hardly any ideas about how to monetize a user base which has stubbornly refused to open their wallets while using Facebook.
Yes, Facebook is one of the greatest user acquisition machines ever invented. However, the company chose to go public at a point where the super-high valuation multiple would need more support from the monetization side of the equation rather than the user acquisition side. Clearly, Facebook’s executives have yet to understand this critical point.