For anyone who doesn’t know what an IPO is, it’s when a company sells its stock to the public for the first time. It’s usually a big deal because it gives the company the chance to raise a ton of money while it gives the public a chance to own a part of the company and capitalize of their success.
For example, I could kick myself back in 2004 when Google first went public and sold for $85 a share. This week it closed trading around $596.
But does that mean we should all run out and buy Facebook stock? Even a Goliath-valued company such as that still has its critics when it comes to demonstrating sustainability.
CNN Money recently ran a very interesting article entitled “Will Facebook be the next Yahoo?” where the author Rob Go discusses the challenges that lie ahead for Facebook. His reasons are paraphrased below:
1. Facebook is broad whereas other companies are doing a better job of building targeted, niche communities.
2. Facebook could lose ground to companies that do a better job of harnessing the mobile Internet
3. Facebook doesn’t have any outstanding ad campaigns or notable products outside its main services
4. Can Facebook hold on to talent the way Google does?
Going back to the Google stock, Google has successfully diversified in many ways from the search engine it started out as. “Android” technology is found almost everywhere now. And how about the thousands of free-ware programs they offer? Any of you bloggers use Google Adsense?
No one can deny that Facebook has changed the Internet as we know it over the last decade and connected us with long lost contacts we would have never otherwise ever seen again. But in business, the question is always “so what’s next?”
What do you think? Will the novelty of Facebook wear off? Will it be able to maintain its lead in social networking or will it lose its leadership the way Yahoo or AOL did? Are you going to buy Facebook stock?
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Photo Credit: Wikipedia
I think that Facebook will be around for a while, but as you have pointed out Google have been smart with diversification. Given that Google hasn’t been able to knock Facebook off it’s perch with Google+ I’d say it is reasonably secure (as far as anything tech-based goes).
I was surprised that Google+ hasn’t lived up to the hype. Facebook seems secure on that front. But now consider Twitter. If you think back about 4 years ago, where was Twitter? I swear Twitter came out of no where and became a giant overnight. In a short amount of time, people where “tweeting”, stars were pushing to see who could have the biggest amount of followers, and the media was eating it up. Maybe Twitter will never beat Facebook, but it sure isn’t too far behind. What’s to stop some other new type of overnight pop-up from storming in and beating Facebook at its own game?
Will be interesting to see how FB handles these challenges. Nice article.
Agreed! I hope they can maintain their free service, not bombard the site with too many ads, and come up with a few side products for diversification.