Don't let the title of this post fool you.
The most recent update from Facebook is that they will soon be going public and filing papers for its IPO, or initial public offering. Yes! We will now be able to find out the private ways of how this extremely public website makes its money, something analysts have estimated but never truly known. However, the situation is not how it really seems to most people. For this initial offering, Facebook will only be opening the offerings up to $5 Billion in shares, a small fraction of the company. The most intriguing part of this move by Facebook is that all of their more private information will now be public. They claim to have 800 Million users, but how many of those users actually use Facebook daily, weekly, or even monthly. With the ease of use of today’s technology, it would not surprise me that people, especially adults, make accounts all the time, use it once or twice, and never sign back on. Heck, even I’ve done that with a few websites. Similarly, there has been lots of discussion generated about Facebook ads, and almost a new type of advertising created. But who knows how successful these ads are? They have created so much hype but are they putting out? The IPO will allow us to finally see all of this information and will answer all of our unknown questions.
Some may question if this is the right move for Facebook, as in the past many internet IPOs have more or less failed, like Zynga and Groupon for example, who both had trouble generating their expected sales of stock for many reasons that would take a while to delve into. But that topic is for another discussion.
The funny thing about this situation is it has people going crazy. Everyone is so excited finally get a chance to buy into a company they love. Sorry to break it down like this, but this is somewhat of a scam. Its a wall street move for a silicon valley company. This is more of a Wall Street insider offering than a public offering. The Joe Six-Packs and Average Joes will most likely not even get a chance at the IPO, but will have to wait for a second offering.
I think a lot of news sources and a lot of its users are overlooking a more important issue. Mark Zuckerburg has voiced his concerns on the negatives of his private company going public on numerous occasions. Because his staff of 2000+ and himself have not had to focus on quarterly earnings and the such, they have been able to really focus on the future of the website. I feel to an extent that now that they are going to have to please more than just their investors that their focuses may shift a bit. Instead of changing the layout of the news feed unannounced until the day of, they may now need to weigh the options of how their users may react to the changes and how those reactions could affect the stock. Instead of the minimalistic and simple ads users see on the right side of the page, they may now see more pop-up type ads that a company in need of real profit may use. A shift from innovation to income would upset a lot of users. So as cool as it is that Facebook is going to be able to be traded publicly, is it something that teenagers, who frequent the site most, are going to want to see?
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