What is an IPO: Lessons Learned From Facebook

It started in November – whisperings that Facebook, the gargantuan social media platform with over 800 million users world wide, was in talks with the Securities and Exchange Commission about an initial public offering. Savvy investors perked up their ears. Some avid Facebook users paused from their Farmville and rants about Timeline to ask – “What’s an IPO?” (For those not in the know, it’s the first stock offered by a private company to the public.)

The Writing on the Wall

In the months that followed, FB IPO headlines splashed across front pages and blogs, and the speculation showed no sign of slowing down. There were the initially enormous estimates of Facebook’s worth as a result of going public. A mass Beatles-worthy hysteria grew in anticipation.

Lacking the Likes

Once the offering went public, however, those headlines changed. Fingers pointed at  Nasdaq for a bungled start out the gate. There was a massive slide from the privately traded levels of $45 a share to the daily fluctuations of about half that amount. And things got extra spicy when head underwriter Morgan Stanely was handed a subpoena for potential insider information regarding earning revisions. And the infamous name behind the Wall – Zuckerberg himself – is the new subject of scrutiny. Would the IPO have been better handled, snarky bloggers muse, if Zuckerberg held an MBA?

The Social Implications

Big business scandal is nothing new. But this is the case of a company that created an unprecedented social phenomenon which altered the very way society communicates. It’s a story that has your average teenager browsing through the Financial Post.

For those uninitiated to the world of trading (myself very much included), this particular piece of news picked up a curious amount of attention due to its subject matter. And it led me to ponder – If the waters of online trading can be disastrous for the seemingly infallible creator of the “Poke” – what are the potential repercussions for the earnest newbie wading in?

The Newbie’s Guide to Online Trading!

Well dear readers, you’re about to find out – and I’m going to be your guinea pig! I’ll be navigating the world of stocks and options – and I’ll be doing it sans broker. Follow me as I choose my platform, my stocks and my diversification strategy. Will I go big or go bust? Only time will tell. And will I take a chance and “Like” the world’s preferred social media platform? Well, not before giving the Risks section in their Registration Statement a good, long look.

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