Example Of Facebook Essay

Initial Public Offering

The Facebook Initial Public Offering (IPO) took place on May 18, 2012. It was one of the largest internet and technology IPO in the history with a market capitalization of $104 billion. After the IPO Facebook raised $16 billion but nevertheless the IPO was considered unsuccessful (Nair, 2014) . The main question before the IPO was the stock price. The expected price between $28 and $35 was increased to $38 as opening price. Most experts came to the conclusion that stocks were overpriced and this was one of the main reasons of Facebook IPO failure and its share price crush more than 50% during next few months. Moreover, there were technical problems during NASDAC IPO process because of a large number of traders. The delay of the IPO made some of traders wary and also played a huge role in IPO failure. Nevertheless, almost three years later the share price of Facebook gained $81.
As I see, the main foreign risks that Facebook faces are the high level of competitiveness and plagiarism. There are a lot of social networks all over the world that copy the principles of Facebook or Instagram (now the part of Facebook company). Foreign countries prefer to develop its home network and gain profit within the country rather than give Facebook opportunity to benefit. According to Foudy (2014), China is a bright example of how foreign countries protect their internet borders and prevent such companies as Facebook to penetrate on it. Moreover, operating on foreign markets mean to comply with the internal laws and respect them. This also may cause a lot of difficulties. In order to mitigate these risks the company may merge such competitors (like it did with Instagram) and patent its ideas.

References

Nair, S. ( January 14, 2014). Why did Facebook’s shares fall after its initial public offering? Market realist. Retrieved from http://finance.yahoo.com/news/why-did-facebook-shares-fall-225006922.html.
Foudy, J. ( December 12, 2014). Two big risks for Facebook in China. CNBC. Retrieved from http://www.cnbc.com/id/102265045.