You’ve probably heard of Facebook’s IPO, but what
exactly does that mean? When a company goes public, it means you can buys
shares of their stock and you’ll see the company’s stock symbol on the sliding
ticker of NASDAQ or the New York Stock Exchange. The initial public offering
(IPO) is a watershed event in a company’s history because it is the very first time that a company offers
stock to the public. Although Facebook will give up some ownership to its
shareholders, it will also receive the largest infusion of cash it has ever
received, to the tune of $10 billion. But why would Facebook need all this
money if it already has all the funds it needs?
Unlike other companies, who’d like the extra cash
to grow and expand, Facebook has plenty of funds on hand. In fact, Mark
Zuckerberg has tried to keep Facebook off the stock exchange by limiting the
amount of shareholders and lobbying Congress for a bill to let companies have a
maximum of 2,000 shareholders before they are forced to go public. The current
rule forces companies to go public once they have more than 500 shareholders
and Facebook has met that threshold, hence their upcoming IPO.
Mark Zuckerberg wanted to delay an IPO for as long
as possible because he knows that shareholders will demand Facebook make money,
essentially giving him a boss that he has to cater to. Despite a new focus on
growth and revenue, the young CEO can model himself after Steve Jobs, who lead
Apple through a period of innovation, which saw the creation of iTunes, iPod,
iPhone, and iPad. Furthermore, the IPO will allow Facebook to buy technology
and companies that can add to the Facebook experience. In addition, early
employees and investors will see big paydays from Facebook’s IPO, which will
reward them for their significant contributions to Facebook’s success.
The Facebook IPO means very little to the average Facebook
user , at least for the time being. His shareholders will demand that something
be done with the vast amount of user information, which can be sold to
marketers and ignite new privacy concerns. Going forth, his main challenge will
be to please shareholders, but do it in a way that doesn’t decrease the amount
of time people spend on, what is now, the second most popular site in the
world.
