Facebook Going Public

Facebook announced its stock market debut as an initial public offering on Wednesday. However, some people are wary of joining this network.

The social media giant plans to raise $5 billion, the highest amount raised by any internet IPO since Google, in security filings. This figure is tentative and is likely to change.

Facebook hopes to raise as much as $10 billion when it goes public in the spring.

The company stated it has been growing fast, but figures were less than some expected.  Facebook said it produced $3.71 million in revenue in 2011, over a million dollars less than financial experts expected.

Joining the stock market could give Facebook a competitive presence amongst other tech companies like Google. The internet mogul is looking to solidify its status as the internet’s most powerful company with Plus, its rival social network.

Plus gained over 4 million users in its first month, a feat unparalleled by Facebook.  However, the intrigue surrounding Facebook’s IPO has increased in recent months, not only become a technological mainstay for its 850 million users, but its adaptive updates to a rapidly changing industry.

 In the letter to potential shareholders, Facebook Chief Executive Mark Zuckerberg states that he plans to keep the company focused on optimization rather than grossing revenue.  

“We think a more open and connected world will help create a stronger economy with more authentic businesses that build better products and services,” said Zuckerberg.

If all goes well, Facebook plans to go public in a three to four months.

U.S. stockholders are eager with anticipation. The Dow Jones Industrial average surged 104.52 points in the first five minutes of trade. The S&P, a broader measure of the markets, added 10.63 points, while the tech-heavy NASDAQ gained 18.06 points.

 “Wall Street is cheering increased speculation about a long-awaited intial public offering from social media site Facbeook.,” said Karee Venema at Schaeffer’s Investment Research.

Despite the company’s anticipated financial success, financial experts worry about the security of investing.  Professional social networking site LinkedIn appeared to be a similar stockmarket goldmine when the company raised $352.8 million in an initial public offering in May. In its first day of trading the company sharply increased its shares to nearly $95 in the first day of trading from an IPO of $45, but it have since given back about half of those gains. 

Financial experts worry that Facebook could reach a similar state and tell investors to approach with caution. Leading angle investor and tech commentator Hussien Kanji explains that the company’s talent may not be able to support a rapid expansion in capital.

“Some of Facebook's brightest employees have already left, as they cashed out. Chamath Palihapitiya runs a new venture fund; Dustin Moskovitz left to found Asana; Matt Cohler is at Benchmark, etc. That said, a lot of these guys left earlier and Facebook is still going strong.,” Hussien said. “The question is what happens when a lot more of the A-plus players leave and the company, in the words of Steve Jobs, starts getting staffed by bozos.”