Facebook Inc CEO Mark Zuckerberg soothed investors in his first major
public appearance since the No. 1 social network's rocky May IPO,
breathing life into its struggling shares after hinting at new growth
areas from mobile to search.
The 28-year-old co-founder looked
confident in a gray T-shirt and jeans, asking Wall Street to be patient
as the company developed new products, addressing issues such as
employee morale, and dashing rumors Facebook may build a smartphone.
became the first U.S. company to debut on stock markets with a value of
more than $100 billion. But it has since lost more than half of its
capitalization as investors fret about slowing growth and the company's
challenges making money as users shift from PCs to mobile devices.
who has himself lost billions of dollars on paper since Facebook's
market debut, admitted to disappointment about his company's crumbling
share price, but argued Wall Street has yet to grasp the full potential
of its fledgling mobile business.
His comments helped drive
Facebook shares up more than 3 percent after hours to above $20,
building on a 3.3 percent gain in regular trade on Tuesday. The stock is
still well off its $38 debut price.
"It was positive just to see
him out there speaking," said Raymond James analyst Aaron Kessler. "He
was hinting that the stock was undervalued, and we'll see about that.
But he's looking at this business as a multiyear investment, even if
investors are looking for results much sooner."
Speaking at the
TechCrunch Disrupt conference in San Francisco on Tuesday, Zuckerberg
highlighted Facebook's progress in mobile over the past six months and
the company's room for growth.
Facebook's recently released mobile
ads are already delivering better results for advertisers than the
traditional "display" ads that appear on the right-hand side of the
social networking service on PCs, Zuckerberg said.
"One of the
main things that I think is misunderstood right now is how fundamentally
good" the company's mobile prospects are, he said.
declining to offer details, Zuckerberg hinted that the company was
halfway through a cycle to "retool" and offer new advertising products.
He also said he believed search could be a ripe area of growth for
Facebook and was working to offer a competitive search product comments
that likely interested executives at Google Inc, one of Facebook's
Facebook has a team working on the social
network's existing search feature, which already garners roughly 1
billion queries every day, Zuckerberg noted. But at some point he said
Facebook would focus its efforts more intently on developing a
full-featured search service, which he described as a "big opportunity."
who wrote in the IPO prospectus that the company has always cared
primarily about its "social mission," has kept a low public profile as
the stock has crumbled in the months since the IPO.
Adding to the
pressure on the stock is the ongoing expiration of "lock-up" selling
restrictions for shares held by employees, insiders and early investors:
More than 1 billion additional Facebook shares are set to become
available for trading by year's end.
Zuckerberg, who recently
committed not to sell his own shares for at least 12 months, conceded
that the company's downward-spiraling stock was not helping staff
morale, but stressed he still thought it was a good time to join the
company and "double down."
"It's not like this is the first up and
down that we've ever had," he told hundreds of attendees at the
conference. "I would rather be in the cycle where people underestimate
While Facebook has taken a beating on Wall
Street, some of the Internet industry programmers, entrepreneurs and
investors who packed the aisles to watch Zuckerberg's roughly 30 minute
talk said their faith in the CEO and the company was not shaken.
company is about vision and changing the world and I don't know who
would be better prepared to lead it than the guy who had that vision and
built the company to a profitable multibillion dollar company before
his 30th birthday," said Dave Crowder of GSV Asset Management, which
owns Facebook shares.
Zuckerberg acknowledged that he had erred
years ago by using a programming language that slowed the development of
Facebook apps for Apple and Android phones.
"Probably we will
look back and say that that was the biggest mistake, the biggest
strategic mistake we made," he said of the company's decision to create
mobile apps using open web standards instead of building apps specially
designed for iPhone and Android smartphones.
But he again quashed a years-long rumor that Facebook is wading into the hardware business and developing a branded phone.
Building a smartphone would be "clearly the wrong strategy for us," Zuckerberg said.
Copyright Thomson Reuters 2012