When I heard that Facebook was filing for an initial public offering (IPO) I immediately became excited at the chance of making easy money. For those that don’t know, an IPO is when a company offers the public the opportunity to purchase ownership shares in that company. Over the past few weeks my excitement has been tempered after I have read many articles and conducted additional research. My goal with this blog post is to add some insight into this highly anticipated IPO.
On August 19, 2004, Google released its IPO to the public. Since that date, it has become one of the most successful technology stocks in history. Its current stock price as of February 17, 2012 is 604.64. Google and Facebook both receive a majority of their revenue from advertisements. Does this mean Facebook will become the next Google? Not necessarily. Google has a much more diverse platform than Facebook. Google offers email, Internet video, mapping, word processing and a social platform called Google+. Most people could hardly go a day without using one of Google’s many features. Facebook offers a social platform and that is about it. While there are many users on Facebook, one could go an entire day or week without accessing it. So, what does this all mean?
I think Facebook offers a great product, but I have to wonder if this IPO is in response to Google’s release of Google+. Facebook may be attempting to raise more capital so they can try to diversify because I am not sure what else they can get out of their social platform. I believe that Google offers advertisers more opportunities to reach a more diverse demographic. I am not telling you that Facebook would be a bad investment, but don’t expect it to make you rich overnight. I would recommend buying a few shares initially and see how they perform.
“Every individual is the architect of his own fortune.”