Facebook was founded by Mark Zuckerberg in 2004, while he was attending Harvard University. In one of the biggest ever US stock flotations, the company launched Friday on the Nasdaq Stock Market with a starting price of $42 a share under the symbol “FB.” Mark Zuckerberg remotely rang the morning bell on this Initial Public Offering (IPO) at 9:30 EST from Facebook headquarters in Menlo Park, California, essentially becoming billions of dollars wealthier in that moment. No American has company has been as so highly valued at its stock market debut.
Triple A Learning IB Blogs
May 19, 2012
February 13, 2012
September 21, 2011
Groupon deals: a win-win or a win-lose proposition?
Although less than three years old Groupon, the daily deals internet business, has become the phenomena of recent times, with a staggering growth in revenues and subscribers (although it remains unprofitable). The company’s much vaunted initial public offering (IPO) is almost as eagerly awaited as that of Facebook. After postponing presentations to potential investors early this month because of volatility in stocks, the online coupon giant is now aiming to go public in late October or early November. The firm reported enviable results in its second quarter of 2011, including a 36% gain in net revenue to $878 million. The increase in sales volumes has pushed its valuation ever higher, with some analysts estimating that it could fetch $25 billion to $30 billion when it floats, dwarfing the $6.6 billion advance from Google Groupon reputedly rejected at the start of 2011. Indeed, Groupon co-founder Eric Lefkofsky now ranks among the 400 richest Americans, according to Forbes magazine’s annual listing released last week.
Groupon signs up local merchants to offer daily discount deals for everything from hotels to balloon flights to sky-diving, which it claims offers a win-win proposition. However, the company is facing doubts over its business model and its ability to sign up the new merchants it requires to maintain its growth rate. The daily deals market space is becoming increasingly crowded and in the US, Groupon’s largest market, 53 deal sites launched in August alone. There are few barriers to entry and discount sites are easy to set up, although difficult to scale without substantial capital and human resource investment. Growth requires the hiring of a huge army of sales staff and account managers to develop relationships with merchants, and this is expensive. Two years ago, Groupon has 30 employees; that figure is now approaching 10,000.
January 7, 2011
Win-win deals with the new ‘kid on the block’
One of the remarkable internet success stories of 2010 was the Chicago-based Groupon coupon website, described as the “lovechild of Facebook and the recession”, as it expanded rapidly on the back of the growth of social networking and increasing consumers sensitivity to price.
The basic business model is simple: Groupon e-mails subscribers a “daily deal” offering a substantial discount for a product or service in their local area. Groupon’s innovation is the collective buying model suggested by its name: group plus coupon. A certain number of people need to buy into any given deal before it kicks in, or “tips” in Groupon speak. The company promotes some 650 deals each day and now more than 95% of these tip. Once the deal is a “go”, everyone who expressed interest in the deal is informed that they have been ‘successful’ and receive a coupon. Most of the time, deals are for services such museums, spas, bars, salons and restaurants.
January 5, 2011
The value of socialising
Goldman Sachs and Digital Sky Technologies (DST), a Russian investment firm have invested 500 million US dollars in the social networking site Facebook according to the New York Times. The cash injection values Facebook at $50 billion, more than Yahoo!, Kraft foods and the Boeing Corporation. The founder of Facebook, Mark Zuckerberg, who owns nearly a quarter of the company is one of the world’s youngest billionaires; with a ‘paper’ fortune now valued at approximately $14bn. Zuckerberg was recently named Time Magazine’s ‘person of the year’.
Zuckerberg is under pressure to take the business public, but is reluctant, preferring to expand the business further without facing the regulation that would accompany a flotation. Future user growth will underpin market values. The Internet is now the main national and international news source for people ages 18 to 29, a study from the Pew Research Center reports. Both Facebook’s News Feed and Twitter launched in summer 2006 have seen explosive growth since 2008. Tweet counts have increased from 5,000 daily in 2007 to 90 million daily in 2010. In addition, e-mail usage among young people is falling, with young consumers preferring instant messaging. In November, Facebook launched a ‘seamless messaging service’ capable of receiving e-mails, texts and instant messages within a single in-box.
