In this Business English News lesson: The value of ‘likes’ and ‘tags’ grew exponentially when Facebook filed its S-1 papers last month. Facebook will launch an Initial Public Offering (IPO) in May, paving the way for 27-year old founder Mark Zuckerberg, his staff, and even a graffiti artist to become exceptionally wealthy.
This month’s Business English News lesson features lots of great vocabulary for talking about company valuations, growth and social networks. Use the links below to access the free transcript and quizzes for this lesson.
The value of ‘likes’ and ‘tags’ grew exponentially when Facebook filed its S-1 papers last month. Facebook will launch an Initial Public Offering (IPO) in May, paving the way for 27-year old founder Mark Zuckerberg, his staff, and even a graffiti artist to become exceptionally wealthy. Mcleans Newspapers had this to say:
The public offering is set to make millionaires and billionaires of early investors, employees, and even the guy who painted the walls at the company’s first Palo Alto, California office.
By capitalizing off of a booming online advertising and gaming market, Facebook hopes to continue to cash in on the advertising dollars that sit on the right side of each user’s home page, bringing in billions of dollars annually. As reported by Marketwatch:
Through sponsored stories and ads, a business or group can pay to highlight certain posts from a user’s friend network or other Facebook pages. IDC analyst Karsten Weide said advertising will probably remain Facebook’s main revenue source, saying, “The low-hanging fruit is really advertising.”
Facebook and its investors are crossing their fingers that users will continue to generate big bucks for them, while continuing to keep users happy; something the competition had a difficult time doing. As Readwriteweb recalled:
People who bought deals from Groupon loved the service, but advertisers backed away when they realized it wasn’t generating the repeat business they had hoped for, and that made Wall Street weary. People love playing games on Zynga so much that they can’t be bothered to click onto ads that fuel the company’s revenue model.
The $75 to $100 billion valuation has many concerned about the growth potential of Facebook, wondering if we should be getting ready to see the bubble burst. As CNET commented:
Although Facebook’s IPO filing points to it making some serious money (profit has more than quadrupled in the last two years), growth is reportedly slowing. The company will be successful for a long time, but the days of hockey-stick growth are over.
One Wall Street Daily analyst suggests that Facebook’s meteoric growth is nearing an end, and that the global economic and employment situation is responsible for Facebook’s rise since 2010.
The company went from 66 million users in early 2008 to 845 million today. That’s more than a tenfold increase! Facebook enjoyed the highest quarterly growth rates when unemployment spiked. But as unemployment dropped, so did Facebook’s growth rate. Coincidence? Anomaly? I think not!
Although its not yet publicly traded, Facebook is already a blue chip stock in many private marketplaces ahead of its public offering this spring when it begins trading under the ticker ‘FB’. The Daily Herald remarked:
The shareholder base has grown to more than 1,000, compared with the 50 to 100 investors most companies have when they go public. Private purchases pushed Facebook’s valuation past $100 billion this month, possibly limiting immediate gains for IPO investors.
You may be asking yourself, “Is it possible for ‘me’ to invest?”, and the short answer is ‘no’, probably not. Stocks for the 12-figure company are currently only available for the 1%. As explained by Gizmodo:
In a big IPO, institutional investors typically nab up to 90% of shares before Joe Investor can get involved. Shares will be available eventually, of course. Just as soon as the stock has risen enough that the big dogs feel comfortable cashing out.
Like it or not, the Facebook that nearly a billion people worldwide have grown to love, or hate, could be in for big changes in the months and years ahead. As Readwriteweb summarized:
From here on out, Facebook will be judged by its share price, market cap, P/E ratio and a whole host of other Wall Street jargon.