Facebook stock jumps in public debut

19 May 2012, 10:38 am   -   Source: AAP

Facebook is now a public company as its stocks surge to $US42.05 on debut.

Facebook is updating its status to "public company" as its stock jumps in its debut on the Nasdaq stock market.

The stock rose to $US42.05 on Friday morning. CEO Mark Zuckerberg smiled as he rang the opening bell from Facebook's headquarters in Menlo Park, California. Surrounded by cheering Facebook employees and wearing his signature hoodie, the 28-year-old pushed the button that signals the opening of the stock market in New York.

On Thursday, Facebook and the investment bankers arranging the initial public offering (IPO) settled on a price of $US38 per share. The company and its early investors raised $US16 billion ($A16.23 billion) in the offering, which valued Facebook at $US104 billion. That makes Facebook the most valuable US company to go public.

Now, the stock market will assign a dollar value to Facebook that will rise and fall with investor whims. It will be subject to broad economic forces as well as how much profit it earns from one quarter to the next.

But Facebook is one of the rare companies whose IPO transcends Wall Street's money lust to become a cultural touchstone for the way technology is reshaping our lives. Since its start as a scrappy network for college students, Facebook has come to define social networking by getting 900 million people around the world to share everything from photos of their pets to their deepest thoughts.

It has done so while managing to become one of the few profitable internet companies to go public recently. It had net income of $US205 million in the first three months of 2012, on revenue of $US1.06 billion.

In all of 2011, it earned $US1 billion, up from $US606 million a year earlier. That's a far cry from 2007, when it posted a net loss of $US138 million and revenue of $US153 million.

The company makes most of its money from advertising. It also takes a cut from the money people spend on virtual items in Facebook games such as FarmVille.

Facebook's public debut marks a new milestone in the history of the internet - and the people who use it.

In 1995, Netscape Communications' IPO gave people their first chance to invest in a company whose graphical web browser made the internet more engaging and easier to navigate.

Its hotly anticipated IPO lit the fuse that ignited the dot-com boom and culminated five years later in a devastating bust that obliterated the notion that the internet had somehow hatched a new economy where making money no longer mattered.

It took Google Inc's IPO in 2004 to prove just how profitable a well-run internet company with a disruptive idea can be.

In the process, the internet search leader has forced other industries to adapt to a new order where people have come to expect to be able to find just about anything they want by entering a few words into a box on any device with an internet connection.

Facebook's IPO underscores an internet evolution that has made the understanding of connections among people as important as Google's massive index of Web links.

Now that Facebook will be under greater pressure to sell more advertising to bring in more revenue, this IPO also cast a brighter light on how just how much revealing information that people have been sharing the past few years without fully understanding the implications.

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