IPO
IPO
I won�t be surprised if IPO is the next trending keyword in the social media circuit; a layman can also predict this. The way social media companies are making their moves, even veteran Poker players wouldnt be able to keep up with them. Around the globe, media analysts, custodians and market-watchers have been left clueless! Nevertheless, they are jumping onto the prediction bandwagon - Will they IPO? Will they not IPO? Heres our take...
A majority of them feel that social media companies would finally follow the traditional IPO route, and the big question now is - Who would do it first?! In the midst of Who, When and Why, gossip mongers all around are warming up to the chilly climate. But the facts are pointing otherwise. With Facebook getting a private funding from Goldman Sachs, LinkedIN being advised by three underwriting firms - Morgan Stanley, Bank of America Merrill Lynch and JP Morgan Chase, Groupon refusing Google�s mighty offer and the latest Zynga (makers of FarmVille, CityVille) media statement declaring that they are not looking for an IPO in 2011, all predictions have gotten cold! The Goldman - Facebook equation created quite a stir bringing Zynga�s disinterest in going public also into the limelight. Not only are celeb companies smart, even start-ups know to strike the right chords. For the moment, there seem to be no takers for IPO.
If we glance through the funds raised by the companies over the years, it would be enough to tell us that money is not the decisive factor here. Facebook has raised $716 million(appx), LinkedIn made $103 million(appx), Zynga has already raised $219 million(appx) turning dorm room babies into men. Men for whom making profits and raising money from the public was never built into their genes. A search in Wikipedia clearly points out how these companies were never built to earn profits in the first place, they were built for the sheer joy of doing something different and making a difference. They were Ideas whose time had come to make history. We arent surprised that after Goldman�s private offer, Mr. Zuckerberg just rules the way he has been doing all these years.
Although IPOs fuel the expansive growth of an organization, the downside is that they curb your freedom and the organization needs to be a profit making one. Not to forget the intense scrutiny from each and every stakeholder. There is no more room for experimentation as the lion is asked to perform under seige. Can you imagine a smiling Zuckerberg in chains?
For a moment, lets suppose that Facebook goes public in the coming months, wouldnt you be tempted to go and buy its shares? At least we would, since its performance has surely been better than the banking and software stocks. Investors won�t have to do a study to know the performance of FB and what reach it has or how it has shaped up. The growth is conspicuous all over the net. We found this amazing info graphic growth of FB over the years summed up by TechCrunch.
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| The Rise of FACEBOOK valuation from 2004-2011 |
Given below is the US data that enlists 25 Web properties by unique visitors provided by Hitwise and graphically prepared by eMarketer.
The list clearly shows that Google and Yahoo Sites have left Facebook behind at the fourth position even though Facebook leads the list of top 10 websites in the US based on the market share of visits.
So one thing is quite indicative here, an IPO does boost growth and acts as an enabler towards sensible and sizable acquisitions as is the case with Google and Yahoo. Another determining factor are the US financial laws - Private funding is not going down very well in their eyes. These may drive them towards the IPO route eventually.
The IPO dilemma is growing more hot and spicy as digital media tops it up with add on flavours. Get ready for surprises galore as Zuckerberg may not want to go the Steve Jobs way only to be sacked from his own creation. How about an #IPO tag to capture all the action!
