Can anyone explain this whole Facebook share stuff?

[Top_Gear_Biggest_Fan]

Can any company do that like twitter for example and what is the point in having shares if the company was doing well privately? Plus what happens when you buy shares? Also I heard that the share prices have been low, what happens if people stop buying them, does anything actually happen to the website itself, can they go bankrupt?

[Keeping]

Well I have been told the reason facebook are selling shares is because it is failing big time! But when you guys shares the percentage you get with your share is the percentage you will make out off facebook's profits... If people don't buy them they just belong to the person who is selling their shares.... The reason the share proces are low is because people want to sell their shares before facebook goes into decline... What is happening to facebook is what happened to bebo and myspace, soon everybody in the world will be tweeting.. Personally I prefer tweeting so much more, facebook is just dull and boring!

[GreyVampire]

The guy above has answered pretty much everything, but you asked if any company can do that. Well, no. Not really, anyway. There are two types of 'company' a Private Limited Company (LTD) and a Public Limited Company (PLC). A Private Limited Company is one that is registered as private, and will therefore have private investors and shares will not be sold to the public. A Public Limited Company is where shares are available for the public to buy at will.

In order for a company to change what type it is, it will need to re-register. This is how it works in the UK at least... not sure about other countries.

[John Ashtone]

Selling shares is a cheap way of raising money.

In the case of Facebook $16 billion, this is now ca$h in their coffers, having sold the tranche of shares at $38 each, from now on whatever happens to the share price has no affect on Facebook.

The total revenues (the money it earns each year) is currently $1 Billion, which is nothing very special at all (hundreds of British Companies have a larger turnover, and thousands of other US companies likewise), but the company made a loss last year, and it is difficult to see that Facebook can increase its advertising by 5 of 10 fold, and even if it did, and made say $2 billion profits, this would put the shares at 15 PE (a term used for shares) at around $5.50

I joked at the time that 38 cents was their worth, I am now saying more seriously October November, for $3.80 to $5.50 after all they have $16 billion in cash.

The price people are paying now is the price people think they might be worth.

Not a lot is the answer.