VirtualWorld.ca
I'm lucky enough to be driving a truck that has XM satellite radio in it right now, and in the past two weeks I've been listening to channels 112 and 113 while driving. Those are the channels for CNBC and Bloomberg business news. And both of those channels have been talking a lot about the Facebook IPO. Probably too much.
Sure, the stock exchange had troubles in the first half hour. But a lot of people are talking about how the IPO price isn't up, how Facebook is overvalued right now, and how some people got too many shares.
First off, a company should price the IPO at a level that will sell all the shares offered for the highest price it can get. This money is going to the company, and if the IPO is priced too low then they are missing out on funding. If the share price had flown up after the IPO, analysts would be complaining about how the IPO was priced wrong. At $38, it was priced right.
Yes, Facebook is highly valued now compared to other tech companies. Will Facebook last? Will it face competition? Being the first mover into real social networking, and having almost 1 billion users, makes me think they will continue to be to social networking like eBay is to online auctions, and Amazon is to online retail. Facebook just has too much of a head start in their space. They are still figuring out ways to make money, especially in mobile which is becoming huge. Their value is their user base, if you have the eyeballs then you can figure out the rest as you go. You can have the best monetization scheme in the world, but if you don't have the users it's useless. Give me the eyeballs anyday and I'll figure it out.
Prior to the IPO, some people put in for more shares thinking they would only get a low % of them. Simply, it's their own fault if they got all the shares they asked for. Many of these people probably hoped to flip the shares for a quick buck, but got caught when the shares went below the IPO price. Too bad, but that's the game you decided to play.
So Facebook is now a public company. It is down in share price, but I've seen many more stocks fall by a lot more in share price in the last few years. It still has some upside as it figures out it's monetization. Now let's move on and stop talking so much about the Facebook IPO, it's in the history books.
