Facebook IPO Analysis Essay

handle business. Facebook is one of the main social media cites around the world. Society

New media has been easily made available everywhere and Facebook in particular as one of the world most popular social networking site (SNS) can be made accessible from desktops, laptops, smartphones and tablet because of this, almost everybody can have access to Facebook anywhere they go. For the most reason, due to the introduction of new media, Facebook plays a key role communication and staying in touch with families, friends, acquaintances, businesses, groups meetings and a whole lot of others. Moreover it has also been useful in growing markets and advertising mediums through big companies, brands and highly respectable top class businesses. New media as a broad topic can be defined as a “form of communication which transmits information through a medium that uses routers and servers via high-speed internet and involves materials been received via desktops, computers, tablets and smartphones”.

Facebook is one of the top social media platforms with more than 1.23 billion active users worldwide. 62% of the 1.23 billion users log in on a daily basis making it the best medium to reach for new customers. Today, businesses both big and small use Facebook as an advertising source to help their brand expand.

People use their Facebook accounts to reach out to others. Usually it is just family and friends but other times there is a need to reach a much larger group that expands past those people. There is no denying that Facebook has been the recipient of some controversy over the years but there is also no denying the good that can come from it as well.

Facebook relies on ad advertisements in their business model. Facebook platform empowers developers to build applications and web sites that integrate with Facebook to reach its global network of users and to build personalized and social products.

Facebook has a high valuation of $75-100 billion which is difficult to justify. After the first quarter, the company failed to produce financials which caused stock prices to plummet. This is not good in terms of attracting new investors. In addition, customers often complain of bugs and problems when interacting online

Anmuth noted Facebook 's engagement in mobile Internet time was strong at about 22% while engagement via desktop reached 18% in September. The analyst expects upside potential of its ad revenue in the second half of the year from its newsfeed, video and ad load acceleration on Instagram. Anmuth assigned Facebook 's stock with a price target of $118. Facebook shares rose 1.3% to $97.20 for a year-to-date gain of 25%. Facebook is scheduled to release third-quarter earnings on Nov. 4.

This lawsuit almost caused the company to shutdown but after Zuckerberg denied any claim, the lawsuit was dropped. It also went through privacy issues in 2009 when they changed their policies, which caused a huge controversy with users. Zuckerberg eventually reverted back to the old privacy policy and is still in the works of changing it. Even with all these controversies, Facebook is still widely used for social networking such as keeping in contact with friends by writing on each others’ walls, posting photos, updating statuses, writing notes, joining groups and attending events.

Regarding 1st February 2012 Initial Public Offering, the IPO was indeed, as opposed to the expectations everyone as to be the soaring ship within the stock market, a disappointment to the investors. This was due to a myriad of factors that played within the market place: factors, which were not, to any extent, expected by the organization and all its shareholders. Plainly speaking, the offer has not performed to the expected

To be able to figure out the underlying reasons of the high market value of Facebook, we have to understand how the market value works. Generally, the market values of the stocks are perceived by us-stakeholders. There are numerous indicators to determine the value of the stock. First is because of mobile. Facebook could thrive in a world based around the smartphone. Zuckerberg manage the transition to mobile, Facebook was getting 53% of its revenue from its 945,000,000 mobile users, Facebook has monetized mobile better than any other website in the world, and its in-stream native ad units are impressively powerful.( Felix Salmon 2014) Secondly, The macro economies, since we are living in the computerized world, this can be strength for the company to capitalize the opportunities in order to capture a sizeable market share, Facebook has huge amount of users and highly concentration, with 901 million active monthly users, Facebook offers advertisers unprecedented access to consumers. It's this scale that makes the site so valuable. Advertisers can reach massive audiences in a single platform.(m)

The trading price of Facebook common stock Class A has been and is likely to continue to be, volatile. The company common stock Class A was sold in May 2012 during the IPO for $38.00 the share (Investor FB, 2017). The stock price has gone from $17.55 at the beginning to $133.50 on December 31, 2016 (Investor FB, 2017). The stock price has fluctuated in the range of $54.71 to $80.02 from the beginning to the end of FY14, to $104 at the end of FY15 to $115.05 by the end of FY16. According to some factors considered in the Facebook ‘Form 10-K, the trading price of the common stock Class A could significantly vary in response to numerous factors, many of which are beyond the control of the organization (Yahoo Finance, 2017). Like fluctuation

Upon research, there are numerous factors that influence the value of Facebook for the better and for the worse. This analysis looks at such factors as the economy, changes in consumer spending, interest rate, inflation, oil price fluctuations, and changing foreign and political situations. Most importantly, when it comes to a social media company such as Facebook, the nature of the foreign and political situation appears to be the most obvious factor influencing its valuation as a company. Repressive regimes such as China, North Korea, and Iran severely restrict access and limit user engagement that adversely impacts financial revenue and reduce shareholder’s equity. Although other factors are less obvious, they also play a strong part in influencing Facebook’s value.

An interesting feature of IPO markets is that they are very sensitive to stock market conditions. IPO volume soars following bull markets and contracts during bear markets. This means that IPO activity exhibits waves in tandem with stock market cycles. The organic link between the level of IPO activity and market conditions is strong. In the US, there were almost 1,000 IPOs during the dot-com boom years of 1999-2000, whereas there were less than 150 IPOs in 2001 after the internet bubble burst and less than 60 IPOs in 2008 when the financial crisis hit.

Sources familiar with the situation tell us Facebook's "close rate" on new employees it wants to hire hovers around 80%.  One former Facebook employee -- who like many former employees, might have an agenda -- puts the rate below 50%. Either way, for a company with the potential to mint hundreds of millionaires in a rare Silicon Valley IPO, both

An article published on 18 May 2012 on Financial Time, ‘Facebook shares already a marketing incentive’, was talking about one Hong Kong-based brokerage company –‘8 Securities’ making use of the hype surrounding of Facebook’s initial public offering, to create values to customers. It also described how this promising company expanded its brand awareness with zero-sum of advertising investment by giving out US$200 of Facebook shares to customers who opened an account with them.