By: Keilany Inciarte
If you haven’t heard the term “Facebook is going public” in the last couple of weeks, you may be one of the rare individuals who hasn’t joined the flourishing world of social media.
Many experts predict that once Facebook goes public, Facebook will have one of the largest initial public offerings (IPO) in history. IPO is the first sale of stock by a previously private company to the public. Today it was confirmed that Facebook shares will be sold at $38 per share. So what will be different?
Facebook will most likely become an even larger company from the capital raised from their IPO. According to the Wall Street Journal, Facebook will raise $77 billion to $96 billion by selling shares to the public.
Well, why didn’t they do this earlier if the company will profit from it? Mark Zuckerberg, Facebook’s founder and CEO, wanted to keep the company private as long as possible because he believes this is the best way to help build the company. With Facebook’s rapid growth in the last eight years since its invention, the company became too large and surpassed 500 shareholders, a milestone that Zuckerberg has been trying to avoid. Zuckerberg has stated in the past that becoming public may impair innovations within the company in return for meeting shareholders’ demands and boosting stock prices.
The Securities and Exchange Commission rule of 1964 states that any private company with more than 500 shareholders needs to abide by the same financial disclosure requirements that a public company does. To put it in a simpler, more straightforward way, Zuckerberg was basically forced into going public, but realistically, it is a great move for the company.
There are several changes that experts say the average user may encounter due to Facebook’s IPO.
Facebook wants to build a stronger mobile presence among its users, possibly leading to the invention of new mobile applications or the acquisition of existing ones. Some say Facebook has reached its peak and that new memberships will start to gradually decelerate, providing a need for other forms of revenue. New inventions will not only be limited to mobile as Facebook is said to experiment with new products, such as the possible introduction of a search engine, one of the most efficient ways to advertise, into Facebook itself. In addition, Facebook will rely heavily on profits from advertisements, leading to the placement of more ads throughout the site. With the addition of applications, brands and media updates to a Facebook user’s news feed, only 12 percent of your friends see your average updates, as reported by Facebook. A possible integration of a paid service in exchange for more exposure on status updates is also being rumored.
Facebook now has approximately 845 million members and has become much more than a social network, serving as a successful media platform for businesses as well.Recently, Facebook has acquired smaller companies like the popular photo-sharing mobile application known as Instagram for $1 billion.
As Facebook approaches a new phase in its history, it’s important to remember that Facebook is not a publisher but a platform.