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Facebook IPO Shares To Be Divided Into Classes

What this means for the public

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Facebook IPO Shares To Be Divided Into Classes
[ Social Media]

Since Facebook announced their intention to go public, it seems the news is all anyone can talk about. Much speculation has been batted around regarding exactly how it will be done and how it will affect users.

WebProNews recently spoke to Chris Treadway, founder of Polygraph Media, about the latest Facebook venture.

“Users will be affected because Facebook will be trying to do everything they can to increase revenues, increase profits, while kind of gradually, incrementally making the user experience a little more… advanced with every passing day,” Treadaway said.

The owners of the social media giant are expecting to raise $5 billion with the IPO. According to their prospectus, the company’s shares will be divided into two classes, which will be identical except for two very important elements:

“The rights of the holders of Class A common stock and Class B common stock are identical, except voting and conversion rights. Each share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to 10 votes and is convertible at any time into one share of Class A common stock.”

What does this mean, exactly? Basically it means that Class A shares will be sold to the general public to be traded on Nasdaq. Class B shares are reserved for Facebook big-wigs, namely Mark Zuckerberg. While he only owns 28% of the company, his claim to the shares gets him a huge chunk of voting rights.

It’s a deft move on Zuckerberg’s part, since it’s a way for him to gain control over the direction of the company.

What do you think about the impending public trade of Facebook shares? Let us know in the comments section.

Facebook IPO Shares To Be Divided Into Classes
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  • http://www.serpitup.com Gabe The Seo Dork

    There is a lot of commotion in the financial media segment that Facebook’s public value could reach about 80 to 90 billion dollars. With that said investors will be looking for revenue generators, and I am not sure if their “ad” networks will suffice. This will force Facebook to alienate the user experience for the sake of shareholder expectations…I honestly believe that this IPO is not a good move by Facebook. They may have hit a ceiling as far as growth with already 900 million registered users. How much more growth is expected ? and how do you monetize this ?

  • http://www.freeinternettvcanada.ca Joe Mayo

    The IPO will be the beginning of the end for Facebook. It just seems like a money grab to me.

  • http://www.q3tech.com Q3

    So Facebook is now keeping the shares to themselves. It’ll be interesting to see how this affects the price of their share !

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