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Will Facebook create wealth for investors?

Last updated on: May 18, 2012 13:45 IST

Will Facebook create wealth for investors?

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Khushboo Gala

On Friday, May 18, Mark Zuckerberg, the co-founder and CEO, will ring the opening bell for the Nasdaq from Facebook's headquarters in Menlo Park, California and shares of Facebook will start trading shortly thereafter at around 11.00 a.m Eastern Time.

A website launched in February 2004, founded by Mark Zuckerberg with his college roommates and fellow students Eduardo Saverin, Dustin Moskovitz and Chris Hughes, today has over 900 million active users. Now, after the IPO, Zuckerberg's stake in the company is worth $19 billion.

In just eight years, Facebook has seen phenomenal growth and has become the third-largest public offering in the history of the US, after General Motors and Visa.

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Photographs: Valentin Flauraud/Reuters

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Will Facebook create wealth for investors?

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According to Social Media Today, in April 2010 an estimated 41.6 per cent of the US population had a Facebook account.

Now, investors are gearing up for the listing of Facebook shares and are very much excited about it. This euphoria is quite magnanimous. Facebook shares will be traded under the ticker symbol FB.

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Photographs: Valentin Flauraud/Reuters

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Will Facebook create wealth for investors?

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What to expect from Facebook Listing?

This is what investors and traders around the world are asking. At what price the Facebook shares will debut on Nasdaq? What will be the closing price for the day? Will it improve the market sentiments worldwide?

Analysts worldwide are expecting that Facebook will list at a huge premium as the number of shares on offer is minuscule in comparison to the high level of investor interest. They are also expecting a closing price above $50 mark.

Analysts believe that investors who will buy shares of Facebook will hold a stake in a unique and potentially valuable business. But they are also exposing themselves to the risks posed by a relatively young company operating in uncharted territory.


Photographs: Jessica Rinaldi/Reuters

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We expect that Facebook could witness a sizeable 'pop' on listing and the share price of Facebook may zoom and stay at elevated levels for some time before the frenzy dies down.

Khushboo Gala is the founder of Rupeeinvest.com. She is also the author of   the "Investment Planning: Turn Your Money into Wealth."


Image: Facebook CEO Mark Zuckerberg
Photographs: Robert Galbraith/Reuters

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