The Coming Facebook IPO
There is no lack of advice and opinions on the relative merits and hype of the upcoming Facebook IPO. I even read someone comparing the potential of Facebook share prices to Apple’s. However, the problem with that viewpoint is that Apple sells actual stuff, while Facebook sells…ads? Granted, such a statement is not entirely accurate, particularly in light of the revenue (roughly 30 percent) Facebook makes from its cut of digital sales on the site. But while Facebook is a social media company, its business model is more closely aligned to the “media” portion of that description.
While Facebook has about 850 million members, its growth has slowed. But the interest in Facebook will continue to fuel buzz for other social media companies (technology or not). While this may not translate to a dotcom-like surge in IPOs, it will certainly make many social media providers attractive acquisition targets. These companies will emerge as the real winners, with Instagram (bought by Facebook for $1 billion) and Radian6 (purchased by Salesforce.com for $326 million) already experiencing such windfalls.