Facebook IPO: What Will Change?

Facebook is being valued between $75 billion and $100 billion and is planning to go public sometime in the next six months. In 2011 Facebook’s revenue grew to $3.8 billion. That means between 20...
Facebook IPO: What Will Change?
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  • Facebook is being valued between $75 billion and $100 billion and is planning to go public sometime in the next six months. In 2011 Facebook’s revenue grew to $3.8 billion. That means between 2009 and 2011 they grew 127% per year. Their IPO is much anticipated but there are some who believe that this will have very little impact on Facebook’s bottom line.

    First off, Facebook only accounts for 1% of the world’s total of $507 billion in advertising expenditures. It is not expected that their going public will spur on any additional corporate spending in this area.

    Secondly, Analysts feel that the value of the stock is grossly overinflated and may not hold its value after the IPO. This would only hurt Facebook’s bottom line.

    Third, it is not expected that a Facebook IPO will encourage any new investment in other tech firms who are searching for startup capital. In other words, Facebook’s going public doesn’t give investors any new motives to believe other internet tech firms are any better of a risk than they were before.

    A Fourth reason why Facebook’s IPO won’t have much overall impact is that it really doesn’t change much for FB’s insider’s. The cost of doing business may increase but, adding new investors won’t change how business is done. Facebook has been traded on private secondary markets by investors and employees for quite some time.

    As of today, no decisions have been finalized about what platform (NASDAQ or NYSE) will even offer the stock. We’ll have to wait to see how going public ultimately effects Facebook.

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