Facebook Goes Public
Facebook has gone public today and now has an IPO. An IPO, an initial public offering is a way that private companies go public which reveals the inner workings of the company including financial information. Francis Gaskins, President and Editor of IPODesktop.com describes this process by using a “real estate analogy,” stating that it’s like a house that was once private and not open to the public is now on the open market where all relevant information is disclosed. The company, now open to the public, is “followed by analysts” and monitored by the Securities & Exchange Commission (SEC).
A company must go public when there are more than 501 investors and worth more than $10 million dollars.
A company usually starts trading about eight to twelve weeks later—after announcing it’s IPO.
This company’s information is being offered to attract investors that want to support the company as a shareholder and hopefully make money as the company grows. To invest, you must already have an account with an investment firm. You can then go through the investment firm to make requests to buy or sell investments.
What does this mean to you?
For such a huge and popular company such as Facebook, there is a lot of buzz and interest—it’s considered to be a “hot IPO.” This means that a lot of investors are going to be initially interested which will result in a spike on investing with the company during the first days on the market.
The people that are going to really see an immediate return on investment—and the making of instant millionaires—will be the employees of Facebook that have shares in the company. Other investors that are able to invest larger amounts of money and acquire more stock will also be prevalent. Traditionally, these are the sectors of investors that are able to afford immediate investment and thus experience a greater or more immediate return on investment.
It has been said that Facebook is going to offer a large amount of stocks so that regular people that hope to invest in the company will also have an opportunity. Being that the United States is the only country that does not have laws against a particular criteria of classes of people that may invest, this may be a huge opportunity for even the average investor.
It has been reported that Facebook opened a $5 billion dollar IPO.
The thing is that with Facebook, everyone knows about it and may sink money in for the moment before “spreadsheet” analysis has been generated that shows actual growth. This could mean a lot of changes by next week. Traditionally, low-key and unknown companies are more attractive for investors because they will be able to buy at a low price and sell at a much higher price—this is a time proven strategy.
Experts are advising that investors that purchase on Facebook today should seek to trade sooner than later, and not hold on to the stock for too long. Gaskins stated that within the after-market, the selling point in the weeks after the initial announcement of an IPO, more analysis would become available to make a more strategic decision on investing.
It seems that only time will tell.
Resources:
Associated Press: http://www.ap.org
Yahoo! Finance – Breakout: http://www.finance.yahoo.com