May 18, 2012 will be the day a few visionaries will remember as the day they became millionaires - or even billionaires - with Facebook’s debut on the Nasdaq Stock Market. The facts are that Facebook is expected to raise approximately $10 billion to value the company initially at $78 to $96 billion based on a midpoint stock price of $31 (from a range of 28 to $35 a share), this event will make Facebook the biggest company to go public in history. Anticipation to Facebook’s IPO is such that is already causing arbitrage from some analysts, who are valuing shares as high as $46. The truth of the matter is that Facebook's IPO is expected to surpass the precedent set by today's titans Google and Amazon IPOs.

Despite the buzz, the fact is that Facebook’s IPO is relevant in many contexts, from the historical stand point to the financial environment to the practical and ordinary lives of its – so far – 900 million users (myself included). Among the many domains where Facebook’s IPO will have an impact there are four of greater importance that I would like to point out.

Financially, this public offering represents a major come back opportunity to the investors and venture capitalists who seven years ago made Facebook possible by injecting the start-up cash the company needed. Firms Greylock Partners and Meritech capital investments on Facebook will be worth over $1 billion each, and for Accel Partners, their initial investment of $12.7 million will be worth well over $6 billion after the IPO. In addition to this, Facebook’s IPO represent a much more solid opportunity to smaller companies that throughout adding value to the social network can generate steady income and economies of scale via Facebook; a good example of this is Instagram recent acquisition for about $1 billion.

Socially, Facebook has proven to be a tool for the masses; what started as an online directory of Harvard students is now one of the most powerful connectivity tools available in the world, which has served to reunite people, organize flash mobs and orchestrate social revolts against governments and dictatorships. As Facebook builds up its value and its technological platform by adding features to the site, creating ventures and improving its user base, the company will continue to exponentially grow in social and political power.

Technologically speaking, today Facebook is responsible for over 50% of the virtual communication content worldwide (e-mail accounts for about 15% only), and along with over 100 billion “user” connections, Facebook represents the largest data base ever created by a single organization. Facebook’s infrastructure not only allows anticipating trends and market behaviors but also provides the resources to manipulate seasonality and map the human global network. With this power, Facebook becomes not only the source of information, but its broker. Think about what this means in the stock market; in a place where reality is based on expectations and with Facebook being both the repository of public perception and the tool where public opinion is created, Facebook could potentially use some of its build-in tools and algorithms to forecast the value of their own stock.

Finally, in the Business environment, once again and as always information is power and it’s more sellable than ever. Between Facebook users “comments” and “likes” to different items, products and services, the company has approximately two trillion pieces of marketable content. Companies both large and small can use this information to advertise better, redefine their customer base and listen to what people like and how they like it. For any given company, Facebook is not a sample of the population to conduct a survey, is the market itself concentrated in a single place of easy access. To this, the capacity of Facebook to share and sell this information becomes one of its greatest assets; I’m sure that all sort of businesses will happily pay a dollar or two to gain access to their target market if it means more and steadier sells. Needless to say, an asset of this magnitude will reflect its value on Facebook’s share price.

Personally, I believe Facebook fits the best definition of the “For the people, by the people” company. It’s a company that feeds on itself, that grows and evolves organically and that can potentially last for as long as society allows it to. Facebook’s IPO represents more than the trading value of the stock; as a public company, Facebook stakeholders are the shareholders, who will dictate not only the contents and new trends of the company, but its market value, its share price and ultimately its fate (nevertheless, with over 55% voting power, this is all contingent upon what Mr. Zuckerberg will permit).
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Diego De la Garza

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