Its a big day for the social networking giant Facebook. On Friday, the company enters the public market after its Initial Public Offering. Can the company gather “Likes” on the trading floor of the stock exchange ? Will people give it a thumbs up and buy it at a premium value ? We try to find out the prospects of this tech giant.
Earlier, Facebook had announced its IPO to go public. The IPO was priced at $38 per share on Thursday, at the top of expectations. People who were sure of the company’s success had subscribed for the IPO. Allocations have been made to retail and institutional investors based on their bids. Today, the stock gets listed in the stock market, and normal traders and investors can buy it in the floor of the market.
It would be interesting to see if the price of the stock zooms up during the listing, as the demand for the company’s share rockets up. Market analysts, however are expecting that the demand might not be so huge for the shares of the internet giant, and even predict that some of the institutions might even sell off their shares allotted during the IPO.
When it comes to the stock market, profit numbers speak it all. Facebook managed to have a net income of $205 million in the first three months of 2012, with a revenue of $1.06 billion. For the year of 2011, it had earned $1 billion, while it could earn $606 million during the year 2010. Facebook is betting big on this profit trend and has decided to go public now.
Do market analysts foresee this trend to continue in the further years ? Can Facebook deliver the same amount of profits to its investors in the future ? This is the big question that the market analysts have been discussing. The price of the share now depends on what the investors feel the prospects of the company would be.
Morgan Stanley, one of the firms identified as the lead underwriters for the Facebook IPO, had previously set a cap of 500 shares per retail client. But it has been recently reported that the firm had increased the limit to 5,000 shares.