Facebook’s IPO: Changing the Game
Facebook’s CEO Mark Zuckerberg has always done things a little bit differently. He is often called “cocky,” but he was named Time’s person of the year at age 26. The billionaire has been considering taking his social media company public for sometime, but Facebook is finally expected to file for an IPO as early as today.
With Morgan Stanley and Goldman Sachs as the leads on the initial public offering, you’d think Facebook’s filing would be standard bulge bracket procedure. However, the company that prides itself on personal connections is pursuing a few unique, if not peculiar, angles when their stock hits the publicly traded exchange.
Like other companies such as Google and Groupon, young technology firms are seeking to add a more personal, quirky touch to their customers via stock offerings. Facebook, with a CEO who has a controversial past and is known for spurning a $15 billion offer from Microsoft, is planning to offer stock to all 800 million users of Facebook from day one.
Generally speaking, with very attractive IPOs, about 90 percent of shares go to institutional investors and about 10 percent of shares are sold to everyday investors. Insurance companies and other large-scale investors are usually investment banks biggest clients. While Goldman Sachs and Morgan Stanley have deep, long lasting, and extremely lucrative relationships with large insurance and investment companies like MetLife, Prudential, and Fidelity Investments, they may be forced to pick between the 800 million Facebook users or the investment banks’ chummy, institutional customers.
Wow, that is a tough call. Appease the 1%? Appease the 99%? With sweeping changes and new laws coming to the banking sector, we may see more pressure put on investment banks to alter the way they are most comfortable doing business.
More transparency, more accountability, a less proprietary nature; the future of the banking sector is in limbo. Accessibility by the common man may help improve relations between the 1% and the 99%. Regardless of intention, Facebook is helping push the relationship in the right direction.
Read more details of Facebook’s unique IPO:
Reid Coopersmith
No comments:
Post a Comment