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Experts ‘like’ Facebook’s chances in public market

Facebook CEO Mark Zuckerberg recently announced the multi-billion dollar company would be going public this spring, and most experts agree it will continue its reign of investors and user support.

Hussein Fazal, cofounder and CEO of AdParlor, the leading company managing Facebook’s advertisements, said in an email this was the next step for Facebook.

“I think it is the logical progression for the company,” Fazal said. “I have confidence that the leadership at Facebook will continue to make the right product decisions and innovate despite becoming public.”

Rupert Murdoch’s News Corporation once bought Intermix Media Inc., which held Myspace, which was previously the most popular social networking site, for $580 million. News Corp., later sold Myspace for $35 million to Specific Media, less than 16 times its original price.

Fazal said there is no way this type of digression would happen to Facebook.

“Not a chance, Facebook is a very different business in a very different time,” Fazal said. “Facebook has built an extremely large and accurate social graph — in addition to being disciplined about their product and the way they treat users.”

Rolfe Winkler, writer for the Wall Street Journal, described some of the pros and cons of large companies when they decide to go public.

“The pro, Zuckerberg will have publicly trading stock which he can use to help finance acquisitions,” Winkler said. “The con, increased scrutiny from the public and pressure to deliver solid results each quarter.”

Winkler said Facebook going public is a good thing, but nothing much will change as Zuckerberg’s “super voting shares” will still have control of the company.

“It wasn’t a matter of wanting to go public so much as regulations require them too,” Winkler said. “The SEC’s 500 investor rule requires companies with that many shareholders to file financials publicly and might as well raise capital at the same time.”

Itzhak Ben-David, assistant professor of finance at Ohio State, said Facebook, after becoming public, will probably not become a battlefield of investors.

“Zuckerberg’s control over Facebook will remain tight also after the (Initial Public Offering),” Ben-David said. “Investors understand that in order to generate value, the user’s experience needs to be satisfactory.”

Facebook is facing tough competition against companies like Google+, but Ben-David said he believes Facebook will see more targeted advertising. Ben-David said that for most large firms, going public is a one-way ticket.

“It means that the firm is under greater scrutiny of investors — they demand results.” Ben-David said. “This is typically considered good, but sometimes investors are short-sighted and they do not like long-term projects.”

Tony Pinto, vice president of Kono Social, a company that provides social media management for small business, said one thing that gives Facebook long-term viability is that Facebook targets everyone.

“It’s a question of maturity, Myspace and the early adopters targeted young folks … My dad uses Facebook and so does the rest of my family,” Pinto said. “I am not saying Facebook’s dominance will last forever, but at least till the next big thing comes out.”

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