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Forget Thiel, Facebook’s Real Problem Is Still Mobile: Analyst

Tuesday, 21 Aug 2012 | 12:02 PM ET
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Kainaz Amaria | Bloomberg | Getty Images
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The fact that billionaire investor Peter Thiel sold the majority of his stake in Facebook shouldn’t worry investors, but the social network’s mobile problem certainly should, BTIG's Richard Greenfield told CNBC’s “Squawk on the Street”Tuesday.

"I'm not really concerned by him selling specifically, what concerns us is the actual growth trajectory of Facebook ," Greenfield said. "The real challenge they are facing is how do they reach consumers in a mobile world."

It was revealed Monday that Thiel, a Facebook director, sold about 20 million Facebook shares last Thursdaywhen the lock-up expired, according to a filing with the U.S. Securities and Exchange Commission. Thiel is keeping 5.6 million shares.

Facebook's stock has been in decline since the company went public. The stock hit an all-time low Monday of $18.75 and closed at $20.01, just a little more than half of the value of the stock's IPO price of $38.

However, the sale was planned before Facebook's IPO, according to the SEC filing, which means that Thiel's sale was not in response to the stock's drop. (Read More:Investor Thiel Unloads Most of His Facebook Shares.)

Peter Thiel Exits Large Stake in Facebook
Facebook early investor Peter Thiel has sold more than 90 percent of his original stake in the company. Rich Greenfield, BTIG analyst, offers insight and explains his concerns over Facebook's growth trajectory..

While investors are still digesting the news of Thiel's stock sale, the company's real problem continues to be that it hasn't figured out mobile advertising yet, Greenfield said.

The social network is ramping up advertising in users newsfeed on the mobile platform to appease investors, but the company still doesn't have a good formula for making sure the ads don't drive users away, he said.

"What Facebook really needs to do is figure out what is the ad load that people can tolerate," Greenfield said. "Also, I think what really is critical is making sure the ads are creatively good."

Creative ads are key on Facebook's mobile platform, because they are displayed much more prominently in users' newsfeed, Greenfield said. If an ad lacks creativity, it will annoy users and and push them away, he said.

"They should be scaling back advertising rather than ramping it up until creative is fixed," Greenfield said. "Even if that means disappointing investors, making the right long term decisions right now I think is really critical for Facebook investors looking out over the next few years."

By CNBC's Cadie Thompson

email: tech@cnbc.com

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  • Matt Hunter is the senior technology editor at CNBC.com.

  • Cadie Thompson is a tech reporter for the Enterprise Team for CNBC.com.

  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.

  • Jon Fortt is an on-air editor. He covers the companies, start-ups, and trends that are driving innovation in the industry.

  • Lipton is CNBC's technology correspondent, working from CNBC's Silicon Valley bureau.

  • Mark is CNBC's Silicon Valley/San Francisco Bureau Chief covering technology and digital media.