Was Facebook right in going public?
8 years after its inception the leading social networking site Facebook (FB) went on to become public in 2012. It was one of the most awaited events of the business world and everyone had huge expectations from the stock. The IPO failed to meet these expectations and led the observers and analysts thinking whether this was a well thought through decision on the part of the Mark Zuckerberg’s team. The aim of this assignment is to analyse whether the decision was right or wrong.
Facebook’s Story till Now
Mark Zuckerberg started FB with his friends, which was launched as Facebook Inc. in 2004.There has been a constant rise in users’ traffic since its inception and had increased drastically in past 4 years. It started off as a closed network of friends which went on to have one billion active users as of September 2012 which made it a phenomenal success. It was a completely new experience for the users which played an instrumental role in its success.
These reasons make FB a very lucrative medium for companies to advertise their products and services to a vast gamut of potential and current consumers across geographies. FB does not need to hire people for its content which itself is user generated. Established brands become the revenue source for FB where they try to pull users through their advertisements. Smaller enterprises are also providing as well as finding business through and to FB respectively.
Facebook going Public
Knowing that its size it would be difficult to keep its financing private, FB went on to become public on May 18th, 2012 starting off with a floor price of $38. It was the most closely watched IPO after Google’s. Valued at $104 bn, it was comparable to Pespsi at $106 bn and was equal to the combined worth of Goldman Sachs and Nike. Zuckeberg’s in his letter at the time of IPO stated that one of the reasons…...