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    Facebook: A historical IPO and the story afterwards


    The social networking giant Facebook made a debut in the stock market on 18th of May and investors saw one of the most hyped initial public offering in the history. Many investors and critics have stated that Facebook is being valued more than it should have been. Facebook commanded an incredible amount of $104 billion in the IPO which is almost 100 times the social networking website's profit of last year. This is one of the major cause of concern for Mark Zuckerberg. Investors have put their trust and money on him and now he needs to prove why Facebook is worth $100 billion. 

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    If we talk about Facebook IPO, the company raised the price from $28-35 to $35-38 just before it went public. In the early stages Facebook shares got a rise of 11% but soon after the price started to sink. According to some stock market experts, the problem came because investors around the world were seen clamoring for shares as its the case with such hyped IPO's and they intentionally asked for more shares than they actually wanted in a hope that they would atleast get the desired number of shares if they are scaled down the list. In a situation like this, Facebook increased the number of shares for sale by 25% just before the IPO, which resulted in investors getting more shares than they expected and wanted. Due to this many investors who got more than the expected number of shares became forced sellers.

    The website built by Mark Zuckerberg in 2004 when he was a student at Harvard expanded to other colleges in a very short span of time and soon became the social networking hub which now has more than 900 million members. Facebook is not just a platform for individuals anymore, brands have actively utilized its potential and played an important part in its success. It won't be wrong if i say that Facebook is the first platform which has brought brands and consumers together.

    Mark will have to prove himself allover again to the investors by achieving the feat of generating huge revenues from the social networking website without loosing the trust of its valuable members. The problem here is that if we look at the ways Facebook generates revenue, there isn't much. Ofcourse Facebook can develop tools and mine tonnes of data that resides on its servers to generate valuable results which can be sold to various brands for a handsome amount. Other than that Facebook earns from advertising, you would see those little ad snippets on the sides of images and your streams but who clicks on these ads. A report published recently stated that, about 57% Facebook users say that they never click on any ads on the site, 26% say that they do click on the sponsored content but very rarely, only 4 percent of the total Facebook users said that they click often on these adverts.

    One more problem that Facebook has to tackle is the increasing number of Facebook users on mobile. The social networking website is expected to touch the 1 billion members mark by the end of this year but most of these members are on mobile and Facebook does not generate any meaningful revenue directly from mobile at the moment. The number of Facebook users are increasing faster than its revenues. Facebook has to do something to generate revenue from mobile, like they can have sponsored posts by brands which will be ranked higher in your streams. We may say and think that Facebook will overcome all this but we can't disagree on the fact that Facebook has some serious problems, like the one stated above.

    There have been news floating on the internet about Facebook entering the smartphone market in the year 2013 but the market is not very inviting at the moment to any new players. Many companies like Dell and HP tried hard to make a mark in the smartphones category but failed to do so. Facebook will have to work hard towards the mobile development and surprise everyone with innovative work to stand a chance in this highly competitive market of smartphones being ruled by names like Google and Apple. According to me, if Facebook ever comes into the smartphone market, they will develop a mobile operating system and it will be Facebook vs Google.

    Now the responsibility of making Facebook a brand that its users and investors have trust on, rests on the shoulders of Mark Zuckerberg again, and we believe that he can pull it off like he has done in the past. 

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