Facebook IPO to set pace for other tech players ?

by Paul Wilson | Friday, May 18, 2012 | 645 views

The Facebook IPO has created a deluge in the mind of investors. After Facebook Inc. going public on Friday, the attention of the markets has turned to see if the sensational debut of the social networking giant will set the lead for a fresh wave of IPO’s by the tech firms.

The overwhelming demand for Facebook IPO shows that the hunger for stocks of social-media hasn’t abated in the last 18 months . The markets , in this period, have seen debuts by LinkedIn Corp. , Groupon Inc. , Pandora Media Inc. and Zynga Inc.

Since Google’s IPO debut in 2004 , the trading debut of Facebook is simply the most anticipated IPO in the tech industry. Shares worth $16 million were sold in the IPO . giving the firm a valuation of more than $100 billion , which has made it the largest offering in the history of U.S markets.

Now after Facebook is finally public , the IPO is being seen as the symbolic coda for the string of social networking companies which are already in the market and will be a measure of the health of IPO markets for the remainder firms. Facebook Inc. is likely to be the component that will make or break the IPO markets. Given the power and the demand of the IPO , if it doesn’t work the IPO pipeline is definitely set to freeze immediately.

The Facebook IPO has come in a time when the number of IPO’s have been shrinking . Of the 12 IPO’s that were scheduled this year , 5 have already been postponed or withdrawn. Nonetheless, the IPO activity has increased compared to the activity last year.

Of the 68 companies that have staged their IPOs this year , 58 of them have had their pricing done between January and April, which is a 10 % increase compared to last year. Ever since the dot-com bubble , this period has been the busiest for the IPO industry. However some analysts are getting cautious over assessing Facebook’s impact over IPO and economy in general. The huge size of Facebook IPO casts its aside as compare d to the broader IPO market. In 2008, even after VISA gave the IPO industry its biggest event , the IPO market did come to a halt with the severity in financial markets .

Even so , the technology related IPOs are being seen as a hot property , as the activity amounts to cashing on the potential of a high flying share performance in the stock markets.

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