Social Media and the IPO World

Facebook, Zynga, Yelp. Words that held no special meaning ten years ago are now daily news headlines. Social media has pervaded nearly every aspect of our society, from the young to the old, from business to consumers, from virtual to mobile – from elementary school students to institutional investors. Currently, social networking is the most popular online activity worldwide.1

 

More than half of America59%is on a social network.2 In fact, social media is so mainstream that many people have grown tired of it. They check their Facebook wall once or twice a month. They occasionally track blogs and tweets without posting comments. Yet regardless of how active users may be, just by opening an account on a company’s website they become a commodity for that company. And commodities are bought, sold, traded and – as is perfectly demonstrated through the new Facebook IPO – used to set a value for a company’s worth.

 

Scheduled to hit the sales block in May, Facebook’s proposed public offering values the company at $75 billion to $100 billion. For a start-up founded in 2004 by a college-dropout, that’s a pretty astounding achievement. According to its filing, the social media site boasts 845 million monthly active users who contribute 250 million photo uploads and 2.7 billion comments a day.3

 

According to a recent article from Wharton, the Facebook IPO will make many of its employees enormously wealthy – and that’s one reason why the IPO may be a tough act to follow. Wharton legal studies and business ethics professor, Kevin Werbach, observed that “It’s difficult to retain employees who have already made millions of dollars on their stock options.” You can read more analysis of the Facebook IPO at the links below.

 

[CLICK HERE to read the article, “The $100 Billion Facebook Question,” at Knowledge@Wharton Today, February 2, 2012.]

 

[CLICK HERE to read, “The Ultimate Guide to Facebook’s IPO,” at Bloomberg Businessweek, February 9, 2012.]

 

[CLICK HERE to view the video, “3 things you don’t know about Facebook,” at CNNMoney.com, March 2012.]

 

Zynga is the social gaming developer that hosts “Farmville,” “Cityville,” and “Words with Friends” on Facebook, currently generating 12% of Facebook’s revenues. About 240 million users play a Zynga game at least once a month, a statistic that helped launch its own IPO valued at around $7 billion back in December 2011.4

 

[CLICK HERE to view the video, “Zynga launching game network,” at CNNMoney.com, March 2012.]

 

[CLICK HERE to read, “Zynga Dumps the Training Wheels,” at Bloomberg Businessweek, March 1, 2012.]

 

Just recently Yelp, an online consumer-reviews site, offered an IPO valued at $900 million. The company’s shares began trading at $15 on Friday, March 2, 2012. The eight-year old global website provides a platform for consumers to share their personal opinions of just about anything, from restaurants and hotels to doctors, churches, high schools and even strip clubs. Yelp attracts 66 million users a month and, by the end of 2011, had posted 25 million personal reviews.5

 

[CLICK HERE to read, “Yelp soars 66% on first day of trading after IPO,” at USA Today, March 2, 2012.]

 

[CLICK HERE to view the video, “Yelp IPO soars! Are you kidding me?,” at CNNMoney.com, March 2, 2012.]

 

New trends and opportunities hit the market every day. Please contact us if you’d like to discuss suitable alternatives for your financial future.

 

 

1 comScore, January 2012.

2 Pew Research, June 16, 2011.

3 SEC.gov, February 1, 2012.

4 CNNMoney.com, “Zynga shares close below IPO price,” December 16, 2011.

5 USA Today, “Yelp soars 66% on first day of trading after IPO,” March 2, 2012.

 

 

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Source: Woods Blog Old

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