Why the Facebook IPO?
So what Facebook plans by raising such colossal sums? Obviously, it wants to build on its phenomenal rise in the social networking space. Facebook wants to dominate the social networks worldwide and explore more options to monetize and expand its services to compete with the likes of Google and Apple is clear on the cards as of now. More programmers, designers, and marketing experts will have a tough task at their disposal.
Promises and Challenges for Facebook
Looking at the company's future promise and prospects one must not forget the challenges it faces. With success, Facebook is moving on more responsibility to keep up the excellent work, and that is what Facebook ought to do now- rise to the expectations that people want their favorite social network to do for them. Rising up to the expectations of 845 million users is a herculean task in itself.
People may move into other social niceties if they revolutionize their way of interacting over the internet just like people took Facebook to their online habits. In this context, Google may be playing the waiting game with its own social features that is gradually integrated into most of its services. The fact that Google is behind Android, the revolutionary mobile and tablet OS, may turn out to be a masterstroke that is not clear yet. Think about a social network in multiple platforms and digital services.
While the bare truth, that Facebook is finding it necessary in raising money through business deals and listing its securities in a public exchange, as it is doing now, due to the difficulty to account for the heavy traffic and resource expenditures may be true, but it is not without a future promise. Alternatively, are the future prospects, not as obvious as it looks now? Rising costs and the 'disappointing' ad revenue does not look convincing enough according to some experts.
Is Facebook the Next Google?
Since its IPO in 2004 Google has grown rapidly to end up generating revenue of $38 billion in 2011 up from $3.2 billion in 2004 and earns up to $10 billion, a year post-IPO of $400 million. Facebook will have to replicate the same success to monetize like Google. That would mean 7 to 8 years of sparkling growth to emulate.
Buying the Facebook IPO stocks
It will not be offering too much for small- time investors. A senior managing partner at IPO boutique, Scott Sweet says that the deal is to distribute the shares to the favored clients at IPO price, and the majority of the clients are institutional clients and the often trading individual investors with substantial accounts.
However, with Facebook taking final steps for going public, one should not get much excited about buying its shares. Before finally you can buy shares, the shares will be offered to private individuals and firms as part of the IPO agreement.
In 2011, out of the public listings of internet IPOs numbering to about a dozen, there is an average 12 percent decline from the IPO price and 34 percent from the first day of closing of the stock market. There is a risk factor in buying shares of these well-set companies, so investors must keep their fingers crossed until clear indications surface.