Jim Urquhart / Reuters
Here I am! Wall Street is wondering where Facebook Chief Executive Officer Mark Zuckerberg is as its stock languishes at half its debut price. PR experts say he needs to show leadership or find someone who will.
By Roland Jones, NBC News
?Where is Mark Zuckerberg?
The question was posed rather forcefully by CNBC host Jim Cramer last week as the social network?s share price continued to plunge and news broke that an early Facebook investor, Peter Thiel, had sold $400 million worth of stock in the company.
The drop in the value of Facebook since May has caused huge concern about the company on Wall Street, and media outlets have even called for the resignation of the company?s founder and CEO Mark Zuckerberg. Facebook shares were trading at around $19 recently, about half?their $38 price when they went public on May 18.
Cramer?s query echoes a broader feeling on Wall Street about the problems now bedeviling the popular social networking company: With the value of its shares down over 50 percent since its highly anticipated IPO, is the company making a hash of the public relations disaster it is now facing; and, just as important,?why has Zuckerberg remained quiet about the state of the company?
Facebook is in crisis, and in a crisis a company?s CEO should be front and center, acknowledging the key issues, apologizing to those affected and giving a commitment to not letting an incident happen again, said Larry Chiagouris, a marketing professor at Pace University?s Lubin School of Business.
?The company needs to make the investment community comfortable that it has people at the top that are serious and determined to make profits,? he said.
?The wonderful thing about the stock market is, in the final analysis, the price of something tends to move toward its real value, so if there really is value in Facebook beyond its current price, the management team has failed to communicate that to investors effectively,? Chiagouris added.
Increasingly, investors are asking if Facebook?s problems are more profound than simply a swooning stock price.
Technical glitches marred Facebook?s first day of trading on the Nasdaq stock market in May, leading to complaints of slow order confirmations and too many shares offered at too high a price. Lawsuits against Facebook and its underwriting banks followed, and Facebook?s share price hasn?t traded anywhere near its $38 offering price since then.
Facebook?s IPO was expected to be one of the biggest stock offerings to ever hit Wall Street, and the company?s offer price?valued the company at $104.2 billion, making it the largest company to go public in the U.S. by market capitalization.
Investors? love for Facebook drove interest in its IPO to extreme levels, and the same herd mentality is now working in reverse, said Chiagouris.
?[Facebook?s stock price] will eventually get to a point where its valuation is unrealistic,? he said. ?To turn that decline around, Facebook has to do a major move -- one would be to replace top management.?
While Mark Zuckerberg is clearly inventive, no one will ever say that he is an effective businessman, Chiagouris said. The company needs to turn the reins over to people who are ?adult? and not beholden to Zuckerberg, he added.
?Facebook has one thing that people want: The largest community in the world. That?s a wonderful asset, but they?re sitting on that asset and they haven?t figured out how to monetize it yet,? Chiagouris said. ?Facebook needs people who are savvy at monetizing an asset, and that would probably not include most of the top managers who are there now.?
Facebook?s Chief Operating Officer Sheryl Sandberg has long been seen on Wall Street as Facebook?s ?adult? executive, having spent years as a senior executive at Google. But Sandberg has yet to demonstrate any independence at the company, Chiagouris said, and despite her appointment to Facebook's seven-person board last June the company?s stock price has continued to slide.
When it comes to handling a crisis, Facebook?s management team has done a poor job, public relations experts say.
As a social media company, Facebook?s image is its most vital asset, said Mario Almonte is a partner at a New York-based Herman & Almonte Public Relations.
?Once MySpace lost its image, it lost its cool factor,? Almonte said. In the same way, Facebook is having an image problem, and this time it?s with Wall Street investors.
The main problem is Zuckerberg, Almonte said.
?He?s locking himself in a room somewhere and refusing to talk to anyone,? he said. ?I think he needs to swallow his pride and bring in experienced people who understand Wall Street and understand the nature of investing and the politics of Wall Street, because a lot of this is about perception.?
?Zuckerberg needs to step up to the microphone and assure them he is working on a strategy to make Facebook profitable for them - and then he must bring in better financial and marketing experts than himself to develop a clear strategy for transforming Facebook into a profitable enterprise,? he added.
Investors have grown skeptical of the company?s ability to communicate its plan to reverse slowing revenue growth and make money from mobile devices -- a channel of strong user growth.
Google is an example of a technology company that got its advertising business right, Almonte said, because ?the advertising is there, all around the user, but it never gets in the way of the clean, efficient user experience.??
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"If people had known that [Peter] Thiel would be unloading stock, obviously they wouldn't be buying stock," says Jim Cramer. "Where's the outrage?"
How often do you use Facebook?
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