( CNN ) -- Facebook seems to be taking a beating these days . But guess what ? That 's actually good news . The world 's most famous social media company 's plummeting share price ( from $ 38 on its first trading day to $ 19 today ) is an indicator that we are not in a bubble , as investors refuse to buy into the temptation to blow tech offerings out of proportion . You know you are in a bubble when stocks soar regardless of intrinsic quality . Far from it , the current market is one of Dickensian realism : the best of times and the worst of times . Apple 's value has soared because it has a clear and wildly profitable strategy . Facebook , Groupon and Zynga sank because their strategies are unconvincing . Put another way , companies with solid revenue models are richly rewarded while companies foolish enough to go public before proving their model are punished . It 's worth noting the companies that have not gone public . Unlike Facebook , Twitter remains private while it continues to refine its business model . Enterprise social network company Yammer sold itself to Microsoft because its founders realized that a sale was the only way to get the resources needed for growth without the risks and distractions inherent in going public . Facebook 's wounds are self-inflicted . The company did a poor job of managing its investor growth and was forced to go public because of Securities and Exchange Commission rules governing companies with assets of more than $ 1 billion and more than 500 shareholders . Facebook compounded its misery by setting its IPO price too high and offering too many shares . Imagine telling Facebook underwriters and founder Mark Zuckerberg : `` You can either sell a lot of shares at a lower price or fewer shares at a higher price . Make a choice . '' Apparently the answer was : `` We 'll take both . '' The consequence was more shares , and more expensive shares , than the market could absorb . Facebook thought that user popularity would translate to investor appeal and counted on its members to buy shares in the IPO . This is what is known as the `` Disneyland effect : '' A family visits Disneyland , has a wonderful time and in the glow of memory when they return home , the parents purchase a few shares , which they then hold forever . The Disneyland effect did n't work for Facebook for two reasons . First , ordinary investors are still gun-shy after the 2008 market crash and not yet comfortable buying stocks in any volume . This left only professional investors whose purchase decision was unlikely to be swayed by how much they like using Facebook to keep up with friends and family . Worse yet , I think Facebook has overestimated its own popularity . There is a difference between using Facebook and loving Facebook . The company has repeatedly annoyed its users with everything from privacy policy waffles to aggressive ad placements . Facebook is the Microsoft of social media ; used by everyone but truly loved by few . Facebook resembles Microsoft in other ways as well . Facebook 's interface is nearly as clunky and inelegant as Windows , and like Microsoft , Facebook is struggling to migrate off the desktop and follow its users onto mobile platforms like smartphones and tablets . Unfortunately , Facebook 's revenue model depends on ample screen real estate in order to please advertisers without annoying users . Ads that can be tolerated on a laptop become a major annoyance when hogging scarce and valuable space on a smartphone . Of course Facebook can get its groove back and it must start with leadership . Calls for Zuckerberg to resign as CEO are premature and pointless , given his iron grip on voting power . But Zuck must match Facebook 's growth with his own personal growth as a leader and strategist and must do it quickly . Facebook also needs more talent . When I visited Facebook 's campus two days before its May IPO , the company had 1.5 billion users , $ 3.7 billion 2011 revenues , and less than 3,000 employees . That is n't lean ; it 's anorexic . I believe that many of Facebook 's stumbles , including its smartphone failure , are due to the simple fact that it has too few people to implement its current strategies . In this respect , Facebook 's weak stock value is an advantage as it can offer new hires options at prices comparable to pre-IPO rates . Facebook 's stumble is not evidence of a bursting bubble . The market may be punishing the company today , but if Facebook can refocus and deliver , investors will be more than willing to reward it down the road . The opinions expressed in this commentary are solely those of Paul Saffo .
David Saffo : Facebook 's plummeting share price indicates that we are not in a bubble . Saffo : The current generation is full of Dickensian stories , the best and worst of times . He says Facebook confused user popularity with market share . Saffo : While Facebook 's mistakes are self - inflicted , it can get back on track .