Social media juggernaut, Facebook made a much anticipated move on Wednesday, becoming a publicly traded company eight years after CEO Mark Zuckerberg kick started the basic form of the website at Harvard University.
Anticipated within three to four months, Facebook, hoping to trade under the ticker “FB”; on the New York Stock Exchange or Nasdaq Stock Exchange, will become one of the world’s most valuable companies hoping to raise $5 billion in its IPO. This amount comes to no surprise where IPO filing documents reveal Facebook’s revenue, the company earned $668 million on revenue of $3.7 billion last year, according to the filing. Speculation involving the potential market value of Facebook quotes figures of $100 billion upwards.
The main source of Facebook’s revenue stream is its highly targeted advertising placements which caters to a high level of market segmentation based on a user’s demographic, behavioural and psychographic factors (the information on a user’s profile such as interests, hobbies, relationships). This creates a desirable avenue for a brand’s marketing team as it allows better exposure to the relevant target market.
Facebook isn’t one of the first Internet start ups to go public. Zynga Inc, which specialises in integrated Facebook applications, represents one of the disappointments of Internet IPOs entering the public domain, with its stock price falling 5% below its IPO price on the first day of trading. Facebook may avoid this as its offering provides a human connection, allowing people to catch up all over the world, play hours of repetitive, pointless but addictive games and enables people to share every minute detail of their day. Furthermore it offers a public channel for celebrities, politicians and companies to connect and interact.
It will be easy to see why this Facebook status update will be liked by hundreds of Facebook employees. This move turns them into instant millionaires due to an accumulated portfolio of FB stock obtained at prices lower than what they will be valued once placed on the open market. Facebook employed 3,200 people at the end of last year.