Facebook IPO: Will The Social Network be successful in stock market?

Opprobrium has erupted in Facebook’s direction since the rumours of their Initial Public Offering (IPO) went airborne six weeks ago. The company has well surpassed Security and Exchange Commission’s (SEC) set threshold private ownership of shareholders.

Therefore the company is bound to make their financial reports public by the time they initiate the filing process at the SEC.

Mark Zuckerberg however, has plans to shell out IPO and rumour has it that it might happen as early as the first half of 2012.

The question is, will the company be able to persuade bankers for investment into a social network that only works as a platform for online fraternization.

The answer to this question is as ambiguous, as are Facebook’s future plans of make huge sums of money.

As tech gurus put it, Facebook has three options to generate revenues in order to stay in the market. Number one is to utilize the power of their user-based that well exceeds 750 million worldwide. In terms of population, Facebook is the third larges country in the world after China and India, digital country, of course.

Facebook can generate profits by targeted marketing much like Google Ads; only it will be focused on specific niches.

So far advertisement is the linchpin to every iota of revenue for Facebook, $4.27 Million to be exact. Targeted advert-strategy might be able to sway investors in case Facebook goes public.

But the issue to ponder upon is: will Zuckerberg and company be able to convince marketers and other business owners to put huge sums of money on stake in gathering attentions of a select-few?

Another solution to generate money is to charge publishers on the usage of Facebook Connect, which currently is free. Charging third-party application to user Facebook’s platform sounds reasonable and might be more successful than the aforementioned option 1.

The other solution left is to persuade and charge research and development organizations to sift through Facebook’s data in order to judge and formulate consumer behaviours and patterns. With an enormous user pool, there might be some potential in this strategy.

To make matters more complex, Google is in competition with Facebook with their online social network, Google +. G+ tows the same line as Facebook. Larry Page has personally entered the scene and with a strong financial backing from Google, Inc., G+ will certainly give FB a run for their money in the coming years.

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Posted by Usman Khalid on Nov 24 2011. Filed under Business. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry