Everyone is focused on Facebook's (FB) failure in terms of its debut on the stock market. However, its app store introduction may be its ticket to recovery.
When Facebook first entered the stock market it was supposed to be an important milestone for social networking companies. However, the opposite has proven to be true. If anything, Facebook is now a major setback for these companies and serves as an example of what not to do. Since its arrival on the scene officially, the combined market capitalization of social media stocks has fallen by about $29 billion.
This is a significant setback for all companies concerned. Facebook, LinkedIn (LNKD), Groupon (GRPN), Zynga (ZNGA), and Yelp (YELP) are among the stocks that have suffered due to these circumstances. However, these notable declines are due in part to specific problems that each specific company has been experiencing and the Facebook problem has simply served to bring our attention to problems that have already existed for quite a long time.
The result of Facebook's entry into the stock exchange market was a big disappointment, and the company has lost a great deal of investor support as a result. We held out such strong hopes for the stock which has since then only managed to disappoint.
NASDAQ has offered to compensate those that suffered due to the mishandling of Facebook's initial public offering last month, but the exchange's competitors are up in arms at the suggestion saying that it is anti-competitive and most likely illegal as well. It seems that NASDAQ is trying to turn a big disaster into something that can serve as a competitive advantage over the other exchanges.
This all looks less than ideal for the social networking site. However, its introduction of an "app" store may be the answer to its problems. This app store could be potentially disruptive to the market. The app center will allow Facebook users to explore software available on the social network.
If Facebook is able to put the technology in place successfully, this new application store will allow it to gather data easily and fill its coffers with cash. As far as I am concerned, the introduction of a mobile app store of this kind is the best move for Facebook. If it is to be a successful player in the near future, it will have to make its presence in the mobile world felt. The company knows very well that this move is central to its ability to make more money out of its mobile users, which, in turn, is central to its future success.
The new application center may be able to boost Facebook's revenue. The social networking company gets 30% of all payments made to the app center using the Facebook credit system. Up until now Facebook has mostly been making money through its advertising deals. This marks the advent of a new way for the company to bring money in.
Facebook may be looking to expand its presence in New York, specifically in Manhattan. This is a wise move. Companies with a strong presence in the area are seen in a better light than those who do not have such a presence. Facebook is not the only tech company to have recently reported a potential intention to expand in New York. Competitor Microsoft (MSFT) is also interested in expanding in the area. This will put Facebook front and center with the growing tech movement in New York City, and help it keep its reputation as a company in tune with innovative trends.
Google (GOOG) has to present the European Commission with a strategy for how it plans to change its practices in order to be less threatening to the competition. The company stands accused of breaking completion laws. If it does not come up with a way to remedy the solution the probe into its activities which has already been going on for 18 months will continue and the company could be made to pay an enormous fine. This sort of anti-trust case is what can break a company. However, Google's strength and reputation will probably get it through the situation.
Something that a lot of people worry about is the safety of their equipment in times when there are power failures or other similar emergencies. Luckily, AT&T (T) has made the very smart move of partnering with Acclaim in order to "improve their power grid reliability, protect equipment from power surges and reduce their utility costs". This is a service that will be available to AT&T's Texas based business clients, and comes as a great relief to everyone who worries about the integrity of their systems.
If Nokia (NOK) is to get back into the mobile phone market in a serious capacity it will have to start doing something to repair its image. In recent news, the company announced that it would be expanding its Lumia range in India. This is quite a leap of faith and fairly significant investment for the company to make. I am not convinced that this is the best path for Nokia to catch up with competitors like Samsung, but it may be its only option at present. The Indian market is a large one, and hopefully, for the sake of its investors, the new Lumia options are successful.
Facebook has a lot to worry about, but it may also have a way out of its current situation. However, its current plays seem to be more like tactics than a coherent strategy and it will be a while before we can conclusively say that the stock is on a track for secured success.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.