What impact will the much anticipated Facebook IPO have on business, technology and the small investor?
It has been on the anvil for two years, long enough for business people to pluck petals of a flower wondering “Facebook goes IPO”, “Facebook goes IPO not”. The business world almost heaved a sigh of relief as Facebook finally took the plunge, even as they made a mad rush to grab a share by understanding the IPO pie.
On the first day of the month of February, Facebook filed what is undoubtedly the world’s most widely publicized and expected IPO of this millennium (better than even Google’s in the last decade), filing their papers online with the Securities and Exchange Commission in Washington to raise at least $5 billion and to sell their stock. Facebook’s stocks are expected to trade in stock exchanges, if there are no problems faced in the mean time, by May this year.
In a letter that accompanies the filing, Facebook CEO, Mark Zuckerberg, said, “There is a huge need and a huge opportunity to get everyone in the world connected, to give everyone a voice and to help transform society for the future… The scale of the technology and infrastructure that must be built is unprecedented, and we believe this is the most important problem we can focus on. We hope to strengthen how people relate to each other.”
In the filing Facebook revealed that in 2011 it had profits of $1 billion with a sales of $3.7 billion.
One of the youngest achievers in history to have a movie made on him even while what he was doing was actually unfolding (the Academy Award winning ‘The Social Network’) 27 year old Mark started Facebook to help Harvard student connect with each other. From a few in 2004 to a few hundred next year to a few thousand later, today it has grown exponentially to have over 800 million active users and even the entry of giant Google with Google + could do nothing to dent its popularity.
Several global investment banks are involved with the IPO. Morgan Stanley is leading it while those like Merrill Lynch, Goldman Sachs, Bank of America, Barclays Capital and JP Morgan are also included.
Despite being the most anticipated IPO of the last few years, it is still not the biggest. That hardly matters for it is slated to become the biggest Internet or technology IPO ever and is expected to have a wide reaching impact on the business of the Internet sector, and technology in general.
Yet, beyond the brouhaha it is important to keep it in perspective, especially with regards the small investor. Despite growth of 45% active users in 2011, it has almost reached stagnation in the countries it began first like the US and most of its growth in 2011 has come from countries like Brazil and India.
Yet, if trends like the recently introduced Facebook Timeline are to be believed, the internet giant is shaping into something else. It understands its responsibility to the users and also that it will perhaps linger in the horizon for a long enough time thus giving them the confidence to start a feature like that.
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