The Facebook IPO: Big Risk and Big Rewards

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You might have heard of what is said to be the biggest tech IPO in history. Well consider it official: the Facebook IPO is here.

Much has been said about its intention to go public. The bigger question is: whether or not the Facebook IPO will mark the beginning of a new era of growth or the end of Facebook’s growth cycle.

Why go public?

While Facebook managed not go public in 2008 – even thought it went beyond 500 Shareholders – the question is why does Facebook have the intention to go public now? In other words, why are we reading all about a Facebook IPO at all?

Taking into consideration that it controls a massive chunk of the online display advertising market and that revenues are estimated to be in the $4-billion range, is going public really necessary? Do they need the cash?

Well, it seems that this Facebook IPO is a necessary step on the road to scaling the business, moving into new markets, hiring staff, and everything else that comes with running one of the biggest businesses on the planet. More than anything, what it seems to represent is an opportunity for all of those initial backers to generate some income off of their early investment.

From a financial perspective, it looks like Facebook doesn’t really need to go public at all. It generates significant revenues already, and even more significant profits.

And anyway, how much bigger can Facebook possibly get?

Perhaps instead of the Facebook IPO the company should be more focused on its future mobile strategy – clearly, this is the area where any post-Facebook IPO revenues are likely to be focused.

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