Some Aspects of Facebook IPO That You Should Know

Soon Facebook will be declaring the fact that they are becoming a public limited firm. They are hoping that by selling their shares to the people they can make ten billion dollars in their initial public offering commonly known as the IPO. As per reports the IPO will place about 75billion to 100 billion dollars as value of the company, which is not really bad considering that Facebook was started only seven years ago. It is only lately that they have been earning money and have amassed one billion dollars in the year gone by. This will be the largest technical IPO after Google and both people who invest in it and the competitors would get to know what makes Mark Zukerberg’s Facebook, the social networking site tick.

What is Facebook really worth?
This is one of the million dollar questions and at the same time this is one of the most talked about IPO that have happened for many years. If by chance the firm is valued anything below 75 billion there would be severe repercussions even in Wall Street. Even at its lowest price the site should be worth far more than Disney that has been valued at 0 billion. Facebook boasts of 850 million users which would total to more than the populations of the US, Mexico and Brazil put together. In fact the site has already gone past Yahoo to get placed as the number one site when it comes to advertising income holding 16.3 % of the market share. This was disclosed by the research company called eMarketer. This research firm firmly believes that the ad revenue collected by Facebook would reach seven billion by the next year.

What would be the difference?
In the initial stages there would not be anything different with the site. They are a firm that keeps inventing various add-on like their new feeds, their timeline, and “Like” tabs and slowly but steadily people using Facebook would begin to see alterations irrespective of the IPO. According to Nate Elliot, an analyst who seems to concentrate on interactive marketing at Forrester Research, the site will never be complete, because they will continue to innovate and change the face of Facebook even when open up to the public and ever after.

Once it becomes a public limited company whatever is done on the site will be critically analysed to see how it would be affected and analysts claim that the most ideal means to do that is by targeted advertising.

According to a marketing and IT professor at MIT’s Sloan School of Management, Catherine Tucker, they feel that Facebook would focus and increase their social advertising such that the ads would be exposed to users as per their friends’ likes and dislikes. This means that if one person “Likes” something, it is assumed that his/her friends would also be interested in it and they would possibly see add, on those items or products when they log in.

Can this imply that one has to be careful about one’s details?
To an extent it would, because with the firm being open to the public it would be scrutinized more, be accountable for and also be expected to be more open. All the same, the necessity to get maximum results would imply that personal information would also be made use of more. This in turn would bring about the anxiety of privacy. In fact, the firm has already been criticized about the way they utilize private data. .it was blamed for being involved in unjust and unreliable doings of making private data public.

Ms. Tucker stated that Facebook may have a tough time trying to balance the problems, meaning that it would have to meet up to the requirements of the new shareholders to make use of the data that they hold and if they do so to a great extent, the efficiency of their advertising could go for a toss.

What is the need to go public?
The company has to pay back their initial investors and currently the numbers of shareholders are such that they have to turn it into a public limited company. However, over all this, the company requires the money. Just like Google earlier had money that it could use for a variety of start-ups, but since they went public they were in a position to purchase some of the major shares of businesses like YouTube and DoubleClick. This is what even Facebook wishes to do. They could get quite some money form going public that they too would be able to make better buys.

Says, Debra Aho Williamson an analyst at eMarketer, Facebook would probably utilize the cash that it get from the IPO to make the mobile site stronger. She commented that the company had been rather slow when it concerns providing great experiences on mobile gadgets and since it is shifting into markets where mobiles are the main source of communication via the Internet, it is vital that they are able to provide excellent mobile coverage.

Would there be any risks involved?
Other than Apple Facebook is one of the most wanted companies, but it is difficult to maintain that. Practically all the great ideas are evolved from start-ups, but when it become a public limited company, they are more responsible and this would imply not conducting to many campaigns or ventures that one can anticipate to make money from and try to focus on trying to make profits with what it has.

The same thing happened in Google. At one time they bragged about their employees being able to use20% of time in doing what they liked to do, but with it going public, they have stopped off Google Labs which was a place where they could carry out various trial and error methods to make money to see which of them would click. They closed Labs because Google could dedicate more money for products that could create greater impact. Therefore it is apparent that Facebook would have to carry out its innovations openly and will be responsible to it users and the shareholders.