Thursday, December 3, 2009
Facebook Must Woo Investors Before Any IPO
This article discusses how social networking leader, Facebook, has created a dual-class stock structure as they move closer to completing the company's plan to sell shares to the public. However, many investors have concerns because there is no sustainable model that looks great for social networking. Previous leaders, MySpace and Friendster, have almost completely lost their allure. So will Facebook follow the pattern or will they somehow continue their superiority? Nonetheless, in September the company announced it was cash-flow positive and on track to generate $500 million in revenue in 2009. These revelations did subside concerns that Facebook lacks a business model. Just think, one day you may own shares to the site that is solely responsible for many hours of procrastinating....
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3 comments:
I don't know if I would invest in facebook for the long term. The way that Internet technology comes and goes, you never know how long this fad could last. Additionally, I do agree that there is no sustainable model for social networking, especially when there have been so many times in the past couple of years when so many users had issues when facebook tried reformatting its homepage.
I also do not know if I would invest in Facebook in the long run. As we have seen over the last ten years or so, social networking companies come and go in time and eventually a new website is created that becomes the new social norm for people to use. I thought it was interesting to read on the first page of the article that Facebook's reliance on advertising for much of it's revenue is one of the biggest concerns for investors. Many people don't usually go to Facebook to shop for products or do reseach, but rather than network and catch up with friends and family
I would agree with the above comments. I do not think that an IPO is the best option for Facebook. This is because social networks come and go, also I feel that the most profitable move for the owners of Facebook is to sell the company to a internet giant, perhaps Google, who could find a way to actually make money off of social networking site. This could either be done by creating a shopping aspect to Facebook or a better advertisement system.
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