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Date
February 2, 2012

Facebook IPO

What "going public" means for the social network.
Transcript

Scott: One of the fastest growing tech companies in history is going public in what is called an IPO. But what does that mean?

IPO stands for initial public offering. That is when a company first decides to let people, like you and I, buy pieces — or shares — of the business.

Right now, Facebook is private, which means it doesn’t have to share its financial information. And it can decide who gets to own parts of the company — or shares. Currently, only Facebook employees and investors are shareholders.

When Facebook goes public, they will have to open up all its financial records. And it will also have to sell shares of the company to anyone who wants to buy them, meaning you or me.

But why would you want a piece of Facebook? Because those ads you see on your Facebook page make a lot of money — an estimated 5.7 billion this year alone.

And the people who own Facebook stock will share in those profits. But the boss at Facebook hasn’t been in a hurry to go public.

Initially, Mark Zuckerburg and the other people at Facebook resisted making it overly commercial because they saw what happened to Myspace. They wanted to gain people’s trust and get people to join and be a part of the community. Now that they’ve done that, they want to get people to be on it more and more and monetize it, which means make money.

And money they will make.

Facebook boss Mark Zuckerberg could soon be worth $24 billion and he won’t be the only one getting richer.

“But look, he’s got engineers, he’s got software people who’ve worked very hard looking for their payday. It’s probably going to come this spring.”

“I think what’s kind of cools is more than a thousand Facebook employees will become millionaires.”

Scott: Those instant millionaires are exactly what businesses around the Facebook campus are counting on.

The local Lexus dealer is ordering more luxury cars to have on hand for suddenly rich Facebook employees. And surrounding neighborhoods are getting ready for a big push in real estate sales.

“Real estate people are ready for any good news because we’ve been hammered for the last five years.”

Scott: So, while you may still be trying to figure out Facebook’s new timeline, investors are waiting to update their status as a Facebook shareholder.

Correlations

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