A New Facebook Challenge: Can They Survive Public Listing?

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Facebook on iPhone and iPadFacebook has captured the attention of the world as the company has progressed from a small social media phenomenon to one of the world’s biggest companies all in the span of eight years leading up to its IPO. In this article we will take a look at the history leading up to the Facebook challenge of public listing (IPO) on the stock market on May 18, 2012.

The Rapid Growth of Facebook

Facebook began as the brainchild of a twenty-one year old student dabbling in social media and soon it became one of the biggest web phenomena to ever hit. Within eight years Facebook has grown to such extreme proportions that it now has some of the world’s most significant investors knocking at its door. Everyone knows that this rapidly growing company is still hotter than ever, but can Facebook stay the hottest thing as it becomes a publicly listed company?

Facebook Floats on the Stock Market

The recent decision to put Facebook on the stock market has many people wondering whether this young company has what it takes to survive this dramatic shift. Facebook is still considered by many to be a company in its infancy and yet this new move will most certainly jar it in to adulthood. What does this new move mean for Facebook? Moving Facebook on to the stock market means that this once private company will now become public in every sense of the word. As a publicly listed company, Facebook will now face more scrutiny than ever before. Where Facebook may have succeeded to date, the question is whether it can survive the picking apart that it is sure to face as it makes a move in to Wall Street.

What Does this New Change Mean for the Future of Facebook?

Aside from meaning that Facebook will come under fire of Wall Street big wigs, the new changes for Facebook also mean that the dynamics are soon to change. Mark Zuckerberg, creator of Facebook, insists that the transition from private to public will not shift the focus of the social network. Experts on marketing and social media hold a different point of view however, and insist that the change will shift the focus of Facebook from users to the shareholders.

Why has it taken so long to get Facebook in the Market?

So why did it take so long for Zuckerberg and the Facebook social networking phenomenon to make an appearance on the stock market? Zuckerberg initially resisted the stock market launch but with the constant growth of the social network it seemed like the next logical step for the company to make. According to many who have an interest in Facebook the stock market listing of the company was inevitable. With so many shareholders having a piece of the pie and so many of them wanting to take advantage of their investment in the social networking company there seems that there was no other option than to go public.

Just how big will Facebook’s IPO Be?

Just what will the IPO mean for Facebook and its founder? There is no telling just yet but there is no doubt that the IPO is going to be huge. Even the Wall Street Journal has taken notice of the “next Big Kahuna of Stock Listings.” The decision to float Facebook in the stock market is surprising to some though, not in the fact that the company went public, but in the amount that the company sought to raise from the floatation. Facebook sold just a small segment of available shares to raise five billion dollars, but according to experts they had expected that the company would seek around ten billion from the floatation. Is the five billion set in stone? The financial advisers for Facebook will need to take a look at the demand for Facebook shares before they can actually determine how much they will raise through the stock market floatation.

The Valuation of Facebook

There are still some analysts who believe that the floatation will give Facebook a valuation of around one hundred billion dollars. Where does this put Facebook in terms of other large companies? Well there is no doubt that it sets Facebook up with the big league players but there’s a long way to go before they are playing with the likes of Apple. To put things in to perspective the valuation of Apple currently stands at four hundred and twenty-five billion dollars, Ford sits at around forty-seven billion dollars and Citigroup sits at eighty-nine billion dollars. This high valuation of the social networking company has raised quite a few eyebrows though as many others believe that the “hype” of Facebook is causing valuations to be higher than they actually will be.

IPO Price

When Facebook opened for public trading on May 18, 2012, it was priced at $38 per share. Its market capitalization at its peak was more than $104 billion.

Why is Facebook So Successful and Why Does it Have Such High Valuations?

There is no doubt that Facebook has been a significant player for a while now but just why is this company receiving such high valuations? In short it is because Facebook has an internet marketing capability that many other companies have failed to harness. According to the numbers Facebook’s revenue doubled to around 3.7 billion in 2011 and Facebook’s share of the US online display ad market grew 6.9 percent in the same year. These incredible numbers are only expected to grow as Facebook is expected to add more users to its already insanely large user database in the coming years and increasing numbers of advertising firms are expected to realize the power of online marketing. Why is Facebook such a great resource for online marketing and advertising? Aside from the sheer number of users that the social network is able to reach through its database of users, Facebook is also able to offer advertising at rates that are significantly lower than other advertising mediums.

So Will Facebook Continue to Grow?

So what many people want to know is whether Facebook will be able to continue growing even after it goes public. Experts believe that the social network will inevitably continue to grow as more users join the global network. Will that growth continue along such a sharp upward spike? This is questionable, but there is no doubt that Facebook is not expected to stop growing any time soon.

Michelle has been obsessed with marketing most of her life and bringing it all online makes it even more exciting! She prides herself on always staying up on the hottest apps and tech tools to make life more fun and productive. When not geeking it out, you can find her on a hike in the mountains or cooking up a vegetarian meal in the kitchen.

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2 Comments on "A New Facebook Challenge: Can They Survive Public Listing?"

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Anonymous
Anonymous

People want to know why I think these are issues. My fear with the company going public is that it will ultimately get gobbled up by some bigger and more aggressive corporate entity that will take the opportunity to open the floodgates on maximizing the value of that audience. Safeguards against sullying the user experience will vanish and then Facebook will become just like any other public medium where we are constantly bombarded with information we do not want or need. Sponsors will have full access to our information and internet habits and just as huge retailers like Target and others have started using algorithms and computer programs to predict consumer behavior, Facebook will start spying on us and creating more and more devious ways to get into our wallets. I can fully see a day where even subscriptions are required to enjoy the full Facebook experience and different tiers of users will start to take shape where the more you pay the more out of the program you get.

None of this was what Facebook was originally intended to be, and the dedicated users who truly value the ease of connectivity and the shrinking of their own personal worlds will have to either comply with the new shape of the Facebook world, or start looking elsewhere. This is more so what I see happening in the future. Once the experience becomes too commercial, people will start jumping ship and looking for the next big thing.

We saw this happen, to a degree, with Myspace when people all jumped to Facebook. Facebook was a cleaner and more controlled environment that was intended to stay very much a “social network” and a lack of oversight by Myspace left the doors open to some dubious activities by enterprising users. Once Facebook is owned by a major profit center, it will be the equivalent of letting the fox run loose in the hen house and everyone will suffer.

I am certainly not against capitalism or free trade, but rather I see things more realistically. Facebook wants to have its cake and eat it too. I believe the ones who run things behind the scenes still have the best interests of their users in mind, but now we are talking about literally billions of dollars in revenue stream and the one common trait we all have as humans is undeniable greed. If Facebook stayed pure, there would still be billions of dollars to be had through creative means, but when you could have MORE billions of dollars if you just do “this” then somebody surely will and that will be the end of Facebook as we know it.

Anonymous
Anonymous

Can Facebook Survive Public Listing? I Don’t Know. It’s a Monster, But is it Invincible?

The imminent arrival of Facebook (the company) on Wall Street was more or less inevitability. It is so immensely popular and universally used across demographics that the value of its audience was simply to vast to ignore. The unfortunate thing is though, that with the popularity comes the sniffing of corporate profit-hounds that will want to not just get in on the fun, but change the product eventually to make it a more streamlined profit center. By doing so, Facebook will eventually go the way of the Dodo.

Even without going public, Facebook was becoming more and more crowded with people looking to advertise their own businesses and income generators. It is a nice policy that Facebook demands that businesses have their own type of profile, with different abilities than that of personal users, but there are still a great deal of ways around the guidelines they set forth to keep the user experience from becoming a never ending stream of advertisements and solicitations.

I personally managed the social media for a small furniture retailer for about a year and we initially set up a page as a personal user rather than using the business page because we were allowed to speak more directly to our client base. Having a business page only allows you to communicate passively, but with a direct account you can send mass messages to your followers or “friends” and be far more effective. This did generate a little backlash with a few of our customers, but after time we figured out how to not over do it and ultimately Facebook caught on to us and shut down the page. We dutifully set up the proper business page, but then set up a ghost account for a fictional employee of the business that did our bidding to complement the activity of the business page. Figuring out this way around the system took all of about ten minutes for my staff and I and we managed to both generate some additional business and piss off a few people in the process.

The point of all this is that by and large, Facebook users do not want to have to deal with people constantly promoting this, that, or the other thing to get at their money. That is not what Facebook was built to be and users will quickly respond negatively if they feel they are being “spammed”. As it was, Facebook has worked hard over the years to prevent things from getting too commercial. They have also embraced the commercial value of such a big and captive audience, but for the average user they make it possible to avoid too many commercial messages. This is ideal and the only way I think that they can survive. If they sell out in the wrong way, without keeping the user in mind, they are screwed. No, I have to say, in my opinion, if they make a bad decision on this one, they are definitely not invincible.

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