Eversheds comment on Facebook’s ‘de-risking’ strategy
Facebook’s announcement that it is to feature adverts on mobile devices for the first time has moved Sam Jardine, TMT associate at international law firm Eversheds to comment on the social networking sites apparent “de-risking” strategy ahead of its planned IPO.
The move is seen by Jardine as a move to crack the mobile advertising market ahead of this flotation.
Jardine said: “This announcement comes less than a week after Facebook’s pre-offering SEC filing identified its non-mobile product advertising as a "risk factor" to its future business model. And now it appears from the reports that Facebook has plans to roll out advertising on its mobile platform within a week.
“The timing of today's rumours are interesting. One might take the view that Facebook has conjured up the solution to a problem it has identified. In which case, we need to ask why the SEC filing didn’t refer to talks with advertising agencies, assuaging investors’ fears last week.
“Or do the talks represent Facebook’s immediate reaction to a problem the market identified as fatal to the company’s future? This would imply a market naivety, which is harder to swallow and wouldn’t seem to be factually accurate, given advertising is apparently less than a week away - major advertising deals can take several weeks just to shape, let alone negotiate, conclude and implement.
“It’s too early to note whether this is an intentional, considered play by Facebook. If it is, we should expect to see more ‘de-risking’ before May’s IPO. By that time, can we expect only ‘acceptable’ (or at the very least, ‘containable’) risks to be present?”