Can Facebook Justify the $16 billion IPO

Now that Facebook shares are up on Nasdaq and trading has begun, let’s see if Facebook is able to make investors happy. Facebook shares started at the price of $38 on Thursday last week seems to struggle on reaching $42 per share. Market reopens on Monday and I see that Facebook shares drops until $35 as I’m writing this post. I suppose Facebook is going to have a tough time pushing up the shares back to $38. In order to do that Facebook needs to show investors that Facebook platform can make money. Check out the blog post title “Facebook turns to mobile ads to justify $16B IPO hype” from Fierce Mobile Content. Although Mobile ads seem to be a market with lots of money making potential, it still does not look good for Facebook judging from the figures and statistic mentioned.

Mobile advertising is going to be tough for Facebook to generate large revenue. The money earn might not be enough to justify the $16 billion IPO. If mobile ads is not working as good as it expected, what alternative action Facebook can take? Well, Facebook might impose member fees just like Linkedin. Paid account will have additional features and upgraded performance compare to free account. Facebook might also invest on gaming just like Farmville. As Facebook will be focusing on improving mobile app, games can be design under mobile app platform.

I’m sure we will see lots of changes from Facebook in couple of months. I just hope that the changes are not surrounded by the intention of justifying the $16 billion IPO and trying to increase the price of the share. But when changes took place, lots of money making opportunities arise. We just have to monitor closely and capture the opportunity.



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