Thursday, January 6, 2011

Should Facebook go public or stay private?

The Wall Street Journal recently announced that there is a good possibility that the popular social media website Facebook will go public in 2012. Which means a publicly traded stock. If that's the case I'm going to be one of the first to jump on the bandwagon from a traders perspective. Already my broker Zecco  is adverting on Twitter through a sponsored link to own a small stake of Facebook through $GS. Seems to me they are targeting to investors to own a piece of a pie that hasn't even been baked yet, signaling a already huge demand for the actual stock.
Owning this IPO (Initial Public Offering) at launch is I think something that almost every investor is dreaming of! 
However, there are some advantages and disadvantages for Facebook itself to go public. The number one reason if Facebook will go public (if it does next year) is to raise extra capital, something I don't think they lack of right now and I think could be one of the reasons why they are holding off the thought of going public any sooner. 
On the flip side, it could be that the revenue figures aren't as great as everyone thought.
One of the disadvantages of going public is, and I would like to elaborate on this a little more, is the fact that they would have to open the books, to investors, traders, the competition, to anyone. On top of that there will be a constant pressure from investors to perform. Is that something Facebook wants to do deal with? 
Mark Zuckerberg, founder of Facebook already stated that he doesn't want to deal with the responsibilities of becoming a CEO of a publicly traded company. Facebook is an incredible phenomenon and I enjoy it very much myself and use it daily, no not only for CityVille!. I think it's a wonderful tool to stay in touch with family and friends and make new connections. In other words, it runs pretty well the way it is. 
Making it public could intervene with the 'functionality of the overall system', if you know where I'm getting at. I'm afraid most features on the site won't be free anymore and we will see a lot more banners and other sorts of advertising to raise revenue even further then the previous financial report to make shareholders happy. 
Then again, Facebook is holding a huge amount of personal data from users around the world. By now shouldn't they kind of have the obligation to make their books and intentions public?
Making it public will sure fill the pockets of many investors but will this be such a good idea, or am I over thinking this?
Now that we are on the Facebook topic, why not become a fan of my facebook page!

What do you think? Should Facebook become public or stay private?

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