Author: Nishant Sheth
As some of you may already know, on February 1st Facebook decided to announce plans for an initial public offering. The IPO could value at up to $100 billion. This is a landmark figure for a company like Facebook, who is into social networking. Facebook is a very useful and integral tool in today’s world. It has a very broad user base all over the world. Facebook generated $3.7 billion in revenue just last year. The main question entering investor’s minds is, does this justify the possible $100 billion IPO? Facebook is not only an important tool for teenagers and college students but also one that is very important in today’s corporate world. Companies know that Facebook is a way for them to reach their target audience and promote their products. It has become essential for companies to utilize social media to remain competitive in their market. The one at the top of the list: Facebook. Some people worry about the IPO because Facebook only has 3,200 employees. Many of these employees would become millionaires after its IPO. This may curb employee motivation as they have already made it big. Also, all this new money will drive Facebook to add more products and services which will focus on profit making. Since Facebook relies on advertisements, more and more products and services means more information from users. This could raise privacy and trust issues. Another big issue brought up is antitrust regulation and technology competition. What do you think about Facebook’s IPO and analysts concerns?
Economist Article: http://www.economist.com/node/21546012