Over the course of two months, Netflix’s market value declined 57%, due to the dissatisfaction of its plan to separate services. As of last week, Netflix changed its tone and decided to yank the unpopular plan. Unfortunately, for Netflix, the damage already took a toll upon its stock. Facebook, on the other hand, still has the time to save itself from the type of damage incurred by Netflix.
Since Netflix is a public company, it has to be more transparent than Facebook: filing financial statements with the SEC is one example. Netflix also has to share its profits with its new shareholders, which surely reduces the size of profits for original equity-holders. Most importantly, however, public opinion can affect the way shareholders invest.
As most of us are aware, Facebook developers enjoy making changes to the social networking giant. Unlike developers, users tend to feel differently. According to an article on PCMag.com in September, 86% of Facebook users disliked the most recent changes to Facebook, which usually tends to happen after layout alterations.
If we are to compare Netflix to Facebook, then Facebook is in trouble, and Facebook employees are well aware of the situation. Each time Facebook changes its look, its stock will plummet to the ground, which is why it has fears of going public. Of course this may not be the only fear of Facebook’s, but Netflix’s case study is a perfect example of what can happen to Facebook after going public.
CJ Arlotta covers the world of social gaming for development firms as well as the average consumer. Currently, he is accumulating more knowledge of the international gaming market to follow and understand what global developers may need to compete with already striving markets. Check out CJ Media Solutions for more.