Facebook representatives announced that the social networking website will soon be selling their stock publicly with the goal of making the company stronger and connecting more users than ever before.
Representatives announced the initial public on Wednesday Feb. 1, although there is no set date for when the company’s stock will be available for trade on the market.
Prabhudev Konana, chair of the UT department of information, risk, and operations management, said Facebook is projected to raise $5 billion in revenue through going public and could be worth $75-100 billion, although analyzing the worth of Facebook is incredibly difficult.
“If Facebook can replicate what happened with Google, they could be very successful,” Konana said. “However, there are not too many examples of success [from companies similar to Facebook] from which to draw conclusions.”
He said the outcome of Facebook becoming a publicly-owned company was especially difficult to predict because similar companies – such as LinkedIn and Zynga – have recently gone public as well. These companies and others that rely on the Internet for success, such as Google and Yahoo, typically make most of their income from advertising, said Konana.
“These companies are all relying on advertising revenue, and they are all chasing the same dollars,” Konana said. “There is only so much of this money to go around, which makes the future very hard to predict.”
However, Konana said Facebook’s success over Google’s competing social network, Google+, could indicate the company is not overvalued. In addition, the large number of companies that choose to provide services on the website provides further evidence that Facebook will be successful in the future.
Konana also said advertising on Facebook could become more intense and targeted due to the company’s decision to sell its shares publicly.
“They will have to [advertise more] because they are responsible for their stock holders now,” Konana said. “They will have to be more aggressive without being intrusive. This will allow them to monetize – or extract maximum financial gain from – their network.”
Management information systems senior Theresa Sturdivant said she also anticipated Facebook would begin to use more aggressive advertising techniques. However, she did not think it would significantly affect users.
“At this point, as a user, I wouldn’t say the advertising detracted from my experience,” Sturdivant said. “I tend to ignore it, like most do. Facebook knows that most ignore their advertisements, and in the future, I can easily see them using more aggressive advertising methods.”
Sturdivant said although she uses Facebook for social and academic purposes, she thinks other networking sites are more professional.
“[Facebook] has been an academic resource when it comes to networking with organization members and alumni,” Sturdivant said. “Otherwise, I would say it doesn’t have much merit in the academic world when you consider the other social networks that are geared directly towards team members, like Basecamp or Piazza.”
Michael Roberts, an English graduate student who teaches a class at UT on the rhetoric of Facebook, said he thinks Facebook will try to compete more with Google after going public. Roberts said Facebook has emphasized information-sharing between friends, while Google has emphasized information-sharing between all Internet users.
“I think they are going to expand their markets, rather than advertise more,” Roberts said. “I see Facebook and Google being more of competitors. Facebook is taking a micro-perspective and Google is taking a macro-perspective on how you get information.”
Printed on, February 7, 2012 as:Facebook to sell stocks