So Facebook is now a public company but with the shares only one day old the news is already bad: Facebook shares didn’t pull a Google or a Yahoo or a Microsoft or even a TheGlobe.com and soar out of sight on IPO day. They ended right where they started pretty much after the day traders took their easy profits. And while Wall Street sees this performance as a dud, Facebook itself sees it as a masterful piece of financial engineering.
If you are an investment banker — and let me re-emphasize that, if you are an investment banker — you want IPO shares to go up on their first day, […]
Facebook last week announced its Initial Public Offering — exactly the event I said wouldn’t happen in one of my controversial predictions for 2012. But I’m sticking with my call on this one since we’re 2-3 months from the actual event and a lot can happen to screw things up between now and then. I’m pretty sure Facebook shares will be trading sometime this year, I just don’t think the company will have a traditional IPO.
Companies go public for many reasons but the two that are most common are: 1) to raise capital for further expansion, and; 2) to secure the wealth of the founders. Some companies go public for different reasons, like Microsoft’s IPO back in 1986 that was literally forced by excessive secondary trading of company shares. Gates and Shirley decided to accept the burden of going public because it wasn’t all bad, but they didn’t seek it because they didn’t need the money.