Facebook Initial Public Offering: What Went Wrong?

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Despite the success and public appraisal, Facebook is still reluctant to become public. The IPO opportunities and advantages for the public, however, will still be enormous because can also share this success with the company. However, the profit of distributing share among individuals can be beneficial for those who buy shares, but for a short period of time.

The point is that if Facebook become a public company, the social network it created will become a place of advertising, but not a place where individuals could communicate (Jacobs 199). So, being a member of an online community, I would be annoyed with other information posted on Facebook since many users buying shares could use it for other than communication purposes.

Facebook should be aware of the fact that the IPO can have a great number of advantages. This is of particular concern to the problem of confidentiality and information security since many other social-networking companies can have a wider access to the innovative concepts introduced by Facebook. Legal and accounting cost can also cause problem because the social network has been considered one of the largest companies.

It is impossible to predict whether the success of Facebook, as a financial project will continue to grow or not because many other social networks emerge, gaining competitive advantage. At this point, the risk of failing while buying shares of the company is huge because of shifts that might occur to the company shifting to a public organization (Jacobs 200).

Hence, there is no guarantee for Facebook as a public company to succeed in its domination over other social networks, such as MySpace, another network that can soon become serious competitor for the company (Jacobs 200). Therefore, there is no need to buy shares of companies whose success eventually dependent on its unique private status.

Receiving share of the company, one can face the risk of lawsuits because the possession of the company’s asset imposes a legal responsibility on all activities and operations carried out with Facebook. Therefore, the company is not a good choice to be invested. Recently, the company launched its campaign on gaining money from introducing mobile devices.

However, the majority of investors are very concerned with the way company gains revenues from the constantly increasing mobile audience. At the same time, Facebook is a promising company that has proved its prime position on the market. Therefore, investing money into the company could be significantly beneficial.

Although the official Fabook’s IPO has recently been introduced, there is a great risk of being overpriced (Jacobs 211). The point that when investors buy and sell shares on private markets and contribute to massive prices augmentations in companies, there are no shares left upside. Shares released through IPO can receive momentum as soon as accumulate new markets, which provides new economic perspectives.

However, because secondary trading has long been practiced, the majority of large companies are already invested and, therefore, new investors can fail to gain benefits (Jacobs 211). For instance, Facebook currently serves about 700 million users, but it is impossible to define whether all of these users are actively engaged into the social network. So, in case the majority of users is not active, than the value of Facebook stock can be decreased significantly.

Facebook continued to be of the great interest to the investor (Carr 210). By introducing initially $ 200 investment, the company launched an offer of $ 100 million for the stock of Facebook Company (Carr 210). Later, in January 2011, the DST co-led a $ 500 million offer together with Goldman Sache and, as a result, the company has become the largest institutional investor holding nearly 10 % of the company (Carr 210). Therefore, Facebook’s recent IPO has introduced greater financial opportunities for the DTS and other leading institutional insiders.

Because the company’s stock level have dropped, retail investors have face significant risk because they were sold stocked at much higher price due to the increased inflation rates. The inflated estimates have been made by the investment banks, which were mistaken.

Despite the wrong predictions, Facebook has still preserved its highly beneficial positions. The company has taken the advantage of the investors’ little concern with inflation levels (Research n. p.). Therefore, Zuckerberg can be regarded as the once receiving most of the benefits in this situation.

Because Facebook was put in operation much earlier, there is not guarantee that all the visitors are actively engaged into social-networking procedures. Therefore, though oversubscribing phenomenon can take place, the demand for the company’s share can be significantly weaker.

Despite the skeptic prediction concerning the valuation, Facebook market stock has been supported by incredible demand. In particular, the float is expected to raise up to $ 16 billion. However, the figure can increase, in case underwriters issue more stock. Moreover, Zuckerberg can succeed in releasing more shared to increase the potential growth of the company.

Further offers introduced through IPO can allow Facebook to take control of the market segment that was previously occupied by social networking companies with fewer capital rates. However, turning private tendencies to public ones because “public markets many benefits that make it easier for more investors to trade” (Miller n. p.).

Despite negative tendencies that can be introduced with the transition of Facebook to a public company, there are still predictions that the company can receive wider opportunities for connecting more and more people all over the world, as well as develop new business ties with other companies.

‘Instagram’ acquisition can be regarded as an initial step of Facebook in initiating IPO. However, the contract between Instagram and Facebook can mark a delay in IPO because the company could face a threat of lawsuit (Research n. p.).

Such a situation can force the investors to rely on the awareness of the social network that the company is not financial flexible, despite the fact that the majority of Facebook users have an access to Facebook via their mobile devices, rather than vie their computers.

At the same time, the acquisition of the device can help the company turn its mobile content into a marketing-friendly space. In particular, Facebook Company gains a full control of launching IPO, but Instagram issues can foster this promotion because of the new opportunities it opens to potential investors (Research n. p).

What is more important is that the Facebook Company can expand their market segments and make their services more available for users all over the world. In such a way, its economic potential grows. Despite the predictions, Facebook has succeeded in launching the IPO campaign in a timely manner.

Works Cited

Carr, Jeffrey. Inside Cyber Warfare: Mapping the Cyber Underworld. US: O’Reilly Media, 2011. Print.

Davies, Rob. Facebook Stock is Set to Raise $16 bn. This is Money. 2012. Web.

Jacobs, Yoni. Gold Bubble: Profiting From Gold’s Impending Collapse. US: John Wiley & Sons, 2012. Print.

Miller, Nancy. The Facebook IPO Primer. US: eBook.com., 2012. Print.

Research, Casey. “Who’s Winning and Who’s Losing from Facebook Botched IPO”. The Market Oracle. Web. http://www.marketoracle.co.uk/Article34858.html

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Facebook Initial Public Offering: What Went Wrong?

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