Facebook
shares began trading on US stock exchange NASDAQ
today at 11:30am EST at $42.25, raising $16 billion and making it one of the
largest tech initial public offerings (IPO). The share price was $4.25 higher
than the $38 pricing Facebook announced yesterday May 17 for its IPO. However, the stock closed at $38.23.
The IPO is expected to close on May 22, according to a company statement.
“The IPO means Facebook will have to
pay more attention to its marketers because that’s where the money is coming
from,” said David Berkowitz, 360i‘s VP of
emerging media. “Historically, marketers have needed Facebook more than it has
needed marketers, but now the tables have turned and marketers are going to
demand more accountability.”
One of the challenges Facebook faces
is that brands are still unclear what the true value of Facebook is, in
particular the value of a fan. Earlier this week General Motors dropped its
Facebook ads, stating the ads had low consumer impact. Berkowitz said
Facebook can improve its offering through several ways, including improving its
analytics, its search capabilities and potentially becoming an ad network
similar to Google. Improving on mobile is also an option as Facebook has
already stated in its SEC filing that mobile remains a weakness.
Facebook has around 150 million
users in the US alone. Facebook also has more information about users than
Google currently has, Berkowitz said. “Social advertising works and
Facebook is in a position to show this better than any other company on the
planet,” Berkowitz said. “It needs to focus more on what the value is and it
needs to tie it to more ROI metrics.”
Finding the balance between pleasing
advertisers and not overwhelming users with so many ads that they leave the
site will be difficult, analysts said. Kip Casino, EVP at Borrell Associates, said the IPO
will change the way the company will be run, as well as the user experience.
However, he could not say how quickly or exactly how it will be
changed.
“I don’t think it will change
tomorrow or the next day. But maybe next year, over time, we will see an
increased demand for some of these money-making initiatives to pay off,” Casino
said. Facebook could not be reached for comment. Morgan Stanley, JP
Morgan and Bank of America declined to comment.
At 2:37pm EST, the share price had
dropped and was trading at $40.11. Casino said he thinks the price will run
up, but wondered if it will stay up.
One complication is the $15 billion lawsuit
filed on May 17 against the social network claiming Facebook invaded their
privacy by tracking their internet use even after logging out of the site.
