About Facebook Going Public

About Facebook Going Public

The news of Facebook going public was received with excitement because everything the social media giant has done so far has excited popular imagination. In any case, the IPO (Initial Public Offer) was devised in order to raise $16 billion from the public. The last time that an IPO had created such a buzz was in 2004 when another tech behemoth Google raised $1.9 billion from the market.

A company generally goes public in order to raise a great deal of money from the market. Companies generally raise capital this way in order to fund their growth. Most companies start off with money put in by investors. However, there comes a time when they need more funds and this is when they plan an IPO.

 This is also the ideal opportunity for the initial group of investors and promoters to get the rewards for their foresight. The shares of the company will then be traded in the market and any person who has the money will be able to buy the shares that are available.

Facebook offered 180,000,000 shares of Class A common stock for sale. In addition, its shareholders also offered 241,233,615 shares of Class A common stock.

 Together they also offered the underwriters 63,185,042 extra shares of Class A common stock in case there was an overallotment of shares. Mark Zuckerberg will still have voting rights to most of the company's shares and will still be at the helm of affairs at the company. Of course, he's also made a lot of money personally as a result of Facebook going public.

There has been mixed reaction to the Facebook IPO. It hasn't done as well as everyone thought it would. Its underwriters, Morgan Stanley, went into overdrive in order to build up interest for the IPO. One of the biggest problems was that Facebook shares were already being traded in the private market at a very high valuation indeed and it would be difficult to expect the IPO to match it.

The company has lost $40 billion in valuation as a result of the share price dropping. Also, many industry analysts are blaming it for the subsequent lack of interest in IPOs that might take a few months to settle down.

 Nasdaq is facing a lot of flak from market traders because of what they say were glitches in the trading systems during the first few hours of trading. Also, many investors have sued the company and its founder because they said that it had withheld certain crucial information regarding expected drop in revenues. There is increasing talk about the lack of transparency in many stock market dealings.

The stock price is expected to fall some more in the next few days. However, even though Facebook going public has been accompanied by a lot of controversies, it is believed that this stock will do well in the future. In any case, it is not the only Americas company this year whose IPO ended up underperforming after much hype.

Article Source: http://www.articlesbase.com/business