Friday, February 10, 2012

Facebook’s IPO: What Does It Mean?

This Article is a Guest Post.

When a company like Facebook wants to be traded publicly on the stock market they apply for an Initial Public Offering (IPO) for a certain amount of money. Facebook announced last week that they were applying for an IPO for $5 billion, and based on the shares this amount will buy, the valuation of the company is upwards of $75+ billion. The media frenzy that ensued did everything they could to dissect the possible effects the move will have on all factors involved.

Several people including myself are worried that Facebook is outdated and their attempts to redesign the template and features offered to its users are feeble in the grand scheme, long-term scope of the business. Obviously Facebook isn’t hurting for business with 845 millionusers, so the IPO isn’t to keep things afloat, but rather to get some quick, liquid cash for possible acquisitions.

Most people have a curious attitude when it comes to the IPO, there is little evidence to suggest people will be fighting over shares; however, everyone does seem to be tuning in just to see what is going to happen next. Especially where the early Facebook employees are concerned, a lot of people who started out with the company took stock options instead of money. Their shares are going to be worth little fortunes now that the valuation deems them so. The big question will be whether or not they stay at Facebook, take the money to play or to start their own companies. Investors are far more interested in getting in on the ground floor of a former Facebook employee who goes off on their own to do something new with the knowledge they’ve garnered and skills they’re honed over the last several years than they are in investing in Facebook itself.

The questions of privacy rage on, and going public only raises those concerns to a near shout in the media. The day to day is unlikely to be changed in any way for quite some time. I certainly won’t be rushing out to buy shares, but my curiosity has been piqued and I will be keeping tabs on the progress.

About the author: Melissa writes about technology and social media,and HP coupon codes and their role in savings.

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