Can someone explain to me the Facebook IPO?

[Martin Z.]

I know little about everyday business, and even less about the stock market itself.

As I understand it now, Facebook is owned by only a few people, and the IPO opens up the chance for people to buy into the company. Can someone explain to me what it means that it costs 30-something for a stock? Why would Facebook do an IPO?

I am also confused as to why Huffington Post is now declaring that the Facebook IPO is a failure and the stocks are going down. Why isn't everyone buying into this succesful company?

Any information would be greatly appreciated, as I am very curious on this subject.

[Rob]

1st IPO on facebook was/is a bad deal for
individual investors.
2nd IPOs that do not increase value by 30%
in first 2 weeks are failures.
3rd IPOs are ways to raise money for future
business increases.
4th Facebook is NOT a successful company
based on it's balance sheets and what is
considered successful in real world.
5th the 30+ is in dollars per share.

[Joseph P]

I had to edit my response after reading Rob's response above. He is totally wrong where he mentions that "IPO's that don't rise 30% in 2 weeks are failures". That is the dumbest thing I have ever heard in my life. In it's first month Dunkin' Donuts traded flat, moving minimally from its IPO price however now trades 25% higher in the months following. Please, listen to someone who actually has experience in the stock market and investment analysis, not some guy who some how manages to become a "top contributor".

Let's start with the basics.

Owning stock means you own a portion of the company. What that portion is depends on how many shares of stock that are outstanding. For example if a company has 100 shares outstanding, and you own 10 shares, you would have a 10% stake in the publicly available shares. While this does not necessarily mean that you own 10% of the corporation, it does entitle you to some benefits such as dividends and voting rights.

What you are talking about when you say IPO, or initial public offering, is the first time the company makes a portion of its company available to the general public. IPO's are typically used for a company to raise money to fund projects such as expansion or research and development programs. The price that the shares are offered at is the price the underwriters feel closely represents the value of the company. At the time this was $38/share. Since the offering however the stock has fallen 6 points and currently trades around $32/share.

The Huffington post, along with many others, is calling this IPO a failure because it was overly hyped and clearly the pricing was off by a wide margin. To further exacerbate the losses due to poor pricing, the stock price is falling steeply in part because of institutional investors shorting the stock in hopes that it moves lower.

As for why people are not buying into the stock, it is likely because they are scared the company will begin losing revenue due to a decrease in traffic on the desktop site and an increase in traffic on mobile devices. Personally I am confident that they will begin the process to monetize mobile advertisements and do so successfully, proving all the naysayers wrong. Feel free to send me an email through Yahoo! answers if you'd like to discuss this in greater depth.

[Bobby Tangeray]

Definitely over hyped - this is their strategy:
http://www.roberttanguay.com/news/facebo...fail-scam/

Yahoo has an active lawsuit against Facebook. Don't let anyone you know buy stocks. Invest in local businesses or start your own. The original owners are going to dump their stock soon, diluting the value.