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The debate is raging about the impending failure of Facebook, fueled
by a rapidly declining stock price and uncertainty over future revenue,
much less profitability. It's nonsense.
The unforgiving equity markets, demanding transparency and quarterly
results, are very uncomfortable with the lack of guidance or even a
story on revenue coming from Zuckerberg and his team. They are only
briefly placated when insiders say they won't sell their shares. The
chatter won't stop about the IPO being priced "wrong", and pundits
equate the fall in share price with the company being doomed to #fail.
The purpose of the equity markets is for companies to raise capital.
It seems we, with our lust for short term gratification and immediate
ROI (return on investment) in nearly all things, have lost sight of
that. If you ask an average person, an IPO is for 1) enriching the
founders and employees, and 2) creating an immediate profit for the
first wave of shareholders, who can liquidate shares to someone willing
to pay even more.
BREAKING NEWS: Facebook raised cash via its IPO to fund operations
well into the future, with a vision for redefining itself from a
web-based social world to a mobile-based world of transactions. The
issue at hand is nobody knows what the mobile-based transactions world
ultimately looks like.
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