Pre-IPO, SEC Smelled Facebook's Mobile Flaws
Prior to Facebook’s IPO, it now appears as if the U.S. Securities and Exchange Commission was after the company to explain how a user shift to mobile devices could impact profits. “Assuming that the trend toward mobile continues and your mobile monetization efforts are unsuccessful, ensure that your disclosure fully addresses the potential consequences to your revenue and financial results rather than just stating that they ’may be negatively affected,’” the agency wrote to Facebook in late February, according to a document made public on Friday.
As Bloomberg points out, “Facebook amended its IPO filing on May 9, about a week before its $16 billion sale, to say that its revenue may be negatively affected by users accessing the site on mobile devices rather than personal computers.” What’s more, the social network said its ability to make money off mobile users was “unproven.”
Since then, the company has not experienced the dream IPO for which many assumed it was destined. Rather, shares have fallen about 24% since the stock began trading at $38 on May 18 -- “in part,” as Bloomberg notes, “because of concern about the company’s mobile strategy."