Reversal Of Fortunes
Groupon Inc (NASDAQ:GRPN) is an example of a company that has flourished after the ouster of a founder lacking in management experience. When Andrew Mason — who worked as a Web developer before founding Groupon Inc (NASDAQ:GRPN) — was fired as CEO on Feb. 28, the online coupon company was down 80% from its initial public offering. Since his departure, Groupon is up 45%, compared with a 13% gain in the Nasdaq.
Similarly, the mobile gaming company Zynga Inc (NASDAQ:ZNGA) ousted its founder CEO, Mark Pincus, on July 1. Prior to Zynga, Pincus had no management experience at a public company, though he had worked in venture capital and as a financial analyst. From its December 2011 IPO to Pincus’ exit, Zynga Inc (NASDAQ:ZNGA) was down more than 40%. Since Don Mattrick — a former president of Microsofy’s Interactive Entertainment Business — took the helm at Zynga, however, the stock is up just over 5%, in line with the Nasdaq’s advance in the same period.
Steady As She Goes
For an example of a maturing company continuing on a growth path under its founder, consider the online review site Yelp Inc (NYSE:YELP), which has kept founder CEO Jeremy Stoppelman at the reins. Stoppelman left e-payment firm PayPal, where he was vice president of engineering, to go to Harvard Business School, where he teamed with other PayPal executives to create Yelp Inc (NYSE:YELP). Since its March 2012 IPO, Yelp is up more than 60%, compared with a 20% gain for the Nasdaq.
Another PayPal alum, Reid Hoffman, left an executive vice president position to start LinkedIn Corp (NYSE:LNKD). Since LinkedIn’s May 2011 IPO, LinkedIn Corp (NYSE:LNKD) is up more than 110%, more than quadruple the Nasdaq’s 26% gain.
Kayak Software Corp (NASDAQ:KYAK) is the travel booking website that was recently sntached up by Priceline for $40 a share. Before founding Kayak Software Corp (NASDAQ:KYAK), CEO Steve Hafner helped found Kayak’s rival travel site, Orbitz, where he was in charge of marketing and business development. Kayak’s buyout is a 20% premium to its initial trading price after its July 2012 IPO — and a 50% premium from the stock’s all-time low in August 2012.
Executive Ranks
Noting that Facebook Inc (NASDAQ:FB) could move higher with a new CEO is not to say that the social network doesn’t have some great executives. Chief Technology Officer Mike Schroepfer served as CTO of Sun Microsystems’ data automation unit and Mozilla’s vice president of engineering. Chief Operating Officer Sheryl Sandberg was previously Google’s vice president of global online sales and operations and served as chief of staff to former Treasury Secretary Larry Summers.
What are the chances of a Zuckerberg ouster? Not good. Zuckerberg has almost complete control of the company, commanding more than half of the voting shares and serving as both chairman and CEO.
With Zuckerberg holding the majority of the voting power, Facebook Inc (NASDAQ:FB) is a “controlled company,” meaning it does not have to have the majority of its directors be independent. With all that said, why would Zuckerberg ever fire himself? Chances are, of course, that he won’t. The stock would have to take a great deal of punishment from shareholders to convince Zuckerberg that it’s time to go.
Action to take –> Avoid Facebook after its recent run-up. Zuckerberg isn’t going away anytime soon, and one great quarter doesn’t necessarily signal a true turning point at Facebook.
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