Facebook is going public
If Silicon Valley sources are to be believed, Facebook shall launch its IPO on Friday, 18th May. The roadshow for the IPO offering is scheduled to begin next Monday. If things work well, Facebook can raise $10 billion through the IPO, thereby pegging the company’s worth to more than $100 billion. This is likely to be the most awaited IPO since Google’s IPO launch in 2004.
The roadshow is expected to be led by the company’s COO Sheryl Sandberg and CFO David Ebersman. The roadshow will discuss details about the company structure, which is based on their two-tier system (similar to Google) with Zuckerberg retaining a major control over Facebook.
Will it be successful, or will it go the Groupon and Zynga way? Are we reliving the dot com bust all over again? There are thousands of questions that come to mind. While investors are anxiously waiting for time to answer these questions, the IPO is already creating waves in the industry. It is believed that investment bankers Goldman Sachs and Morgan Stanley are willing to offer underwriting charges for less than 1% of the gross proceed. This is far less than the normal rate industry charge – 7 per cent for small deals and 3 per cent for large deals.
Even as the IPO is all set to become the best market debut ever, there are other concerns that need to be addressed. The primary one being the company’s inability to handle advertisers and their revenue. Facebook pays a lot of attention to consumer experience, but is ignoring advertisers who often find that they are knocking on the company’s doors but there is no one to respond. Now, this isn’t a business-model endorsement that the company wants, especially with the IPO launch getting ever nearer. Advertisers need Facebook to think beyond their self-service ad system and move on to a more sophisticated format, where they can find a better way to reach their 900 million users.
In an open letter to his share holders, Mark Zuckerberg announced that “….Facebook wasn’t initially built to be a company …it was built to accomplish a social mission – to make the world more open and more connected”. Little did he know that his mission would include almost 15 per cent of the world population. If Zuckerberg’s keen on taking Facebook to an even bigger scale, problems such as these have to be addressed.
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About James Andrews
Director at HP Net Services - you can connect with me by clicking on the buttons below.