Feeds

Facebook's IPO was a disaster? RUBBISH, you FOOLS

Well, not for Facebook, anyway

The essential guide to IT transformation

Acquisitions? Facebook? Really?

Funnel of cash. Credit: via SXC – http://www.sxc.hu/profile/Leonardini

Funnel of cash. Credit: via SXC

Which brings us to the final possible reason why they might want to float the company. To have a liquid currency, as opposed to one restricted by that 500 rule, with which to go buy other companies. But we're not really seeing much evidence of that, are we? Instagram, sure, but other than that they're not exactly printing stock to snap up other players, are they?

Which brings us back to the general view in the financial markets.

Facebook just didn't have any great or convincing reason to go public other than that SEC rule. They didn't particularly want more capital, or more liquid currency and insiders were already able to sell. So it really just was those regulations that led them to it. Which is one reason why there's not been much excitement about the stock from said financial markets. Facebook became public very much as the reluctant bride and that's never something that creates a great deal of excitement.

But what about...

As to whether the flotation was successful, well, from the point of view of those who bought it: obviously not. But from the point of view of the company, the sellers, it was just great. They sold, in good capitalist fashion, for a better price then than they were going to get a week later or any time since.

There are problems with having a low share price, sure.

For example, you might want to issue more stock to increase your capital, perhaps you're running out of money? But as above, they're cash generative so that's not a problem.

You might want to issue more stock to buy other companies: but again, that doesn't seem to be what they want to do either.

The third one is that you're paying your people partly in stock and you want to be able to motivate them. But a low stock price helps not hinders there. Everyone getting issued restricted stock or options is getting them at the current low low prices. Everyone can see that there's more potential upside from a low share price than a high one. Yes, of course, those who got the stock at last year's higher price are pretty pissed but they're already committed to the company.

The end of this story is that Facebook's IPO simply hasn't been a failure. It does depend upon the specifics of the company's situation, yes. They're cash generative and need no more capital. They don't seem to be trying to buy up everyone else. A low stock price just doesn't bother them that much.

And they did manage to get away what they did sell at twice the price or more of today. This is, in that red-in-tooth-and-claw way of capitalism, regarded as a success, not a failure. ®

Secure remote control for conventional and virtual desktops

More from The Register

next story
6 Obvious Reasons Why Facebook Will Ban This Article (Thank God)
Clampdown on clickbait ... and El Reg is OK with this
No, thank you. I will not code for the Caliphate
Some assignments, even the Bongster decline must
Kaspersky backpedals on 'done nothing wrong, nothing to fear' blather
Founder (and internet passport fan) now says privacy is precious
TROLL SLAYER Google grabs $1.3 MEEELLION in patent counter-suit
Chocolate Factory hits back at firm for suing customers
Mozilla's 'Tiles' ads debut in new Firefox nightlies
You can try turning them off and on again
Facebook, Google and Instagram 'worse than drugs' says Miley Cyrus
Italian boffins agree with popette's theory that haters are the real wrecking balls
Sit tight, fanbois. Apple's '$400' wearable release slips into early 2015
Sources: time to put in plenty of clock-watching for' iWatch
prev story

Whitepapers

Endpoint data privacy in the cloud is easier than you think
Innovations in encryption and storage resolve issues of data privacy and key requirements for companies to look for in a solution.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Advanced data protection for your virtualized environments
Find a natural fit for optimizing protection for the often resource-constrained data protection process found in virtual environments.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Next gen security for virtualised datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.