Can any financial-savvy nesties school me on Facebook IPO?

colleen724

I really have no clue how this all works and am for some reason interested in it.  How are shares handled now when there is currently no public trading?  How does Zuckerberg hold control of the company after shares are offered?  When can the public buy shares?

I wish I had paid more attention in Econ in college!

laurenpetro

ok, here's what i know, which admittedly isn't that much:

FB filed the paperwork for the IPO.  the NYSE/NASDAQ (i assume they're going on the NYSE but i could be wrong) has to process the paperwork and make sure their financials are in order.  i believe in their paperwork FB files a request for a certain number of shares, say 1 million shares with an opening sell of say $100.  if all of those sell then Boom, he's worth a billion (this is obviously way off because initial estimates are that he'll be worth something like $50B on paper when this is all through).  they don't have to sell all of those shares, though.  Fb can retain control of whatever percentage of those shares that they want in order to retain a controlling interest in the company (this prevents companies from buying up all public shares and overthrowing the board of FB.)

they are selling sometime in either late april or early may.  at that time most of the shares are either being sold to mutual funds held by pension plans or to private equity firms.  the public will have very few shares available for sale.  this part blows, IMO.  it's another case of the rich getting richer and f*ck the regular guy.

sorry i don't have more info than just that.  this is what i've been picking up on NPR over the last 24 hours.

atwood345

There are no shares when you're private. FB has about 500 private investors right now, before the IPO comes out. He will still be in control as long as he's willing, but I do believe he will have to bend a bit to make investors happy once the IPO goes through. I think the shares will be for sale publicly in another month or two.

Check out cnn.com. there was a short video about the basics of an IPO. 

AmyRob04

This is basically how it works, and im shortcutting a lot of it.

A company is founded. The founder/owner and select executives and employees are given shares (worthless until/unless there is an IPO) and stockincentives (which can be in any of a dozen forms depending on the company and it's goals) or options (option to buy). Typically if you are an employee you still have to buy your shares but you're give incentive pricing and there are often restrictions on how long you need to hold them when they are matured, how much you can sell, etc. It really depends on the company.

So the company decides to go public. They get valuated by analysts - say they are valuated as a $100 billion company - and they decide to hold half the shares among the employee group - everyone gets their dollar share which again, don't mean much until the company goes public. (Think of it like your house - you buy it for $100, a one point its worth $500, and thenits worth $50 - its all paper gain/losses nti, you go to sell) They then select a market n which to go public (each market has its own rules and they don't all work for everyone).  Once the PUBLIC IPO happens, the shares begin to get traded and that's when people get rich. 

 

Regarding Zuckerberg - it's a public company once public trading begins but he's still going to be a majority shareholder so he carries a LOT of power even when it goes public. 

MrsDonnelly2007

Also when a company decides to go public they file an initial registration statement with the SEC. This is the initial filing with historical financial statements etc. The filing is not effective at this point until the final filing is register and accepted by the SEC. 

colleen724

Thanks all!  Its very interesting.  I've also read that not a lot of people are saying its a great buy, but it would be cool to have a piece of it   A small piece.