Will The IPO Change Facebook?
Will The IPO Change Facebook?Feb 02 2012 - Business - Farhad Divecha
Facebook has finally filed for an IPO with the U.S. Securities and Exchange Commission. What will this mean for the users of the world’s most popular social network?
The company, which was private so far, was rather secretive about their financial dealings. Most of these details will now have to be made public, as they will be answerable to their shareholders.
Facebook has filed for an IPO worth $5 billion. This means that they hope to be able to raise that amount of money from the sale of their shares. However, they have not yet clarified how many shares they will be selling and what the price of each share will be.
Analysts are speculating that the total valuation of the company is around $75 to $100 billion.
It is also too early to know exactly how Facebook will utilise the money generated from the IPO. Speculations are rife that among other things they may choose to buy over Zynga the manufacturer of the popular social game FarmVille. Rumours about Facebook manufacturing their own mobile phone are also doing the rounds.
Additionally, it is certain that the IPO will help the local economy of Silicon Valley where their headquarters are situated. The cash generated from the IPO will also help Facebook to steal a chunk of Google’s display ad revenue as advertisers reallocate budgets to the place where most users are.
None of these possibilities matter too much to Facebook’s end users though. Their experience and loyalty to the network should theoretically remain the same.
Going Public Changes Companies
Whatever Mark Zuckerberg, Facebook’s founder and CEO may say, once the company goes public, they will be answerable to their shareholders and they will have to change the way some things are done.
For one, there is bound to be a push to monetise the network further and further. While a lot of this growth could come from international expansion and uptake of their advertising services, analysts will expect to see growth in the US and Europe as well.
In-Stream and Mobile Ads
Growth and monetisation will mean the need to sell more advertising. While the right-hand column on Facebook already contain a lot of ads, the news feed has remained relatively free of advertising. This is likely to change with the introduction of sponsored stories in the ticker in the near future, and surely will result in the placement of ads within or at the top of the main news feed eventually.
Mobile is another area that is currently free of advertising, but is also very likely to start seeing the infusion of ads.
What other changes do you expect to see once Facebook goes public?