Facebook IPO Explained

By:   |   June 14th, 2012   |   Facebook
Facebook IPO explained

What is the Facebook IPO news all about?


I’m sure you’ve all heard the whole Facebook IPO debacle in the news lately. Here it is again.

To start off, I’m sure some of you will be asking: What’s an IPO? Well, to cut it short, an Initial Public Offering (IPO) comes about when a company gets big enough to have shares. These shares are no longer able to be held privately, and so, they’re sold off onto the market for your everyday people (and those who want a piece of Facebook) to get a hold of.


An IPO, to put it plainly, is a sort of stock on the stock market.


Why put a company up for IPO? It can be seen as a particularly risky venture, with the biggest risk being that potential investors don’t see the value of the business, meaning the shares could end up next to useless. On the other hand, for some, the potential rewards outweigh any negative feelings. IPO’s have the potential to shoot a company’s value sky-high, making them a lotof money. It’s an attractive deal.




When setting itself up for IPO evaluation, Facebook valued itself at $100 BILLION. This, to put it simply, meant that Facebook expected its shares to generate about $100 billion when it set itself up on the market. Some saw this as a strange turn- Facebook is popular. Very much so. But it doesn’t offer any physical goods; its success is measured in how many people use the site and as with any website, this fluctuates. Those people had their heads screwed on, as when Facebook put themselves on the market… Clearly things did not go quite so well


With prices continuing to slide, we’ll have to keep an eye on just how well Facebook manages to continue.


The end of another dot.com megastar on the horizon? We all saw how MySpace went down…


Would you buy a Facebook share if you could? Let us know!



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