It’s getting extremely interesting on the eve of Facebook’s IPO, with the social network managing to raise an incredible $16 billion, while setting the price per share at an impressive starting point of $38 apiece. As expected, the managers from the big-money companies have all been keen to get in on the act, and the share price leaves Facebook’s market value at an incredible $104 billion – half that of fellow web-based giant Google.
It’s the biggest internet IPO in history, and to put things into even better perspective, Facebook’s market value will eclipse that of Amazon – a company which has been the cornerstone of goods trading online for well over a decade. When Google floated back in 2004, it raised less than $2 billion, but such is the pressure and furor surrounding Facebook, that the incredible sum has been gathered. The top U.S. IPO of all time is Visa, which managed to raise $17.9 billion in March 2008, but given Facebook’s short lifespan, the sums of money are truly eye-watering.
There remains a strong feeling of optimism, despite some investors increasing the number of shares being sold. Facebook upped the price range earlier this week, prompting the likes of Peter Thiel and Yuri Milner to rethink their sales numbers, and with General Motors stopping $10 million worth of Facebook ads because it felt they were not working, there’s certainly a few causes for concern as everybody gets carried away by Facebook’s stock market debut.
As well as the problem with ads, Facebook is struggling to monetize mobile platforms, despite the mass market migration to smartphones and tablets from the traditional desktop – through which Facebook made its name. Although Instagram is now under Facebook’s control, Mark Zuckerberg’s company will need to capitalize on the amount of money attainable through mobile ecosystems.
With 200 million credit card-enabled iTunes Store accounts alone, it’s clear Facebook needs to take a few leaves from the Apple tree as it takes its baby steps into the big, bad business world. The investors seem ignorant to the signs, but Zuck and his board of backers from Goldman Sachs to Barclays should recognize that there is still plenty of hard work to be done.
Not that I am an expert. Thoughts?