Facebook's Stock

Social networking has played a prominent role in allowing users to connect with each other around the world over the past decades. Social network sites are used in order to improve intimate communication and build better relationships with family, old and new friends. Facebook in particular is one of the most popular social networking sites. It provides a wide range of connection methods for users to interact with those people that they care about and to update status or photos on the website. The website was established by Mark Zuckerberg and his college friends in February 2004. It is owned and operated by Facebook Inc. The company has continued to develop and increase potentiality over the last eight years (PrivCo, 2011). As of March, 2012, there were more than 900 million Facebook users, more than 125 billion friend connections and there were an average of 300 million photos uploaded each day on the website (Facebook's S-1 Filing, 2012). In this sense, Facebook has become the largest social networking sites in the world. Additionally, when the company started trading stock to public on 18 May, 2012, it was also recorded as the third largest IPO in the history of the United States (Hammond, 2012). However, the stock price has been significantly falling since selling the stock to public. Although social networking is a growing market and the company plans to continue developing its productions and services, investors remain worried about the ability of the company and they have doubted that the stock will not be able to turn profit margins in both short-term and long-term period. Therefore, the stock of Facebook should not be invested in because it is overvalued and overpriced and the company might struggle with commercial revenue and be restricted in many areas. This paper will describe the stock market and Facebook's situation before and after trading to the public and will also discuss the question of investment in the stock of the company. It will then anticipate the future of Facebook.