A.

Overview of Facebook company

- Facebook, Inc. is a US social media and online social
networking services company founded in 2004 based in
Menlo Park, California. It was founded by Mark Zuckerberg,
along with Harvard University students and roommates
Eduardo Saverin, Andrew McCollum, Dustin Moskovitz and
Chris Hughes. This is considered one of the Big Four
technology companies along with Amazon, Apple and
Google.
- Since 2006, anyone claiming to be at least 13 years old has
been allowed to sign up for a Facebook account, although this
may vary depending on local laws. Facebook held its first
public offering (IPO) in February 2012, valuing the company
at $ 104 billion, the largest valuation so far for a newly listed
public company. Facebook makes the most of its revenue
from ads that appear on screens and in the user's News Feed

B. Scope of activities
- Facebook services can be accessed from Internet-connected
devices, such as PCs, tablets and smartphones. After
registration, users can create a custom profile that reveals
information about themselves. They can post text, photos and
multimedia shared with any other users who have agreed to be
their "friends". Users can also use various embedded apps,
join common interest groups, and receive notifications about
friends' activities. Facebook claims that there are more than
2.3 billion monthly active users as of December 2018.
However, it faces a major problem with a series of fake
accounts. Facebook has caught 3 billion fake accounts, but the
ones it missed were the real problem.

C. Operation scale
- Facebook is one of the most valuable companies in the
world. Facebook is talked about a lot in the media, including
much controversy. Facebook also offers other products and
services. The company has acquired Instagram, WhatsApp,
Oculus and GrokStyle and independently developed Facebook
Messenger, Facebook Watch and Facebook Portal products.
- By the end of 2007, Facebook had 100,000 business pages
(sites that allow companies to promote themselves and attract
customers). These start as team pages, but a new concept
called company pages has been planned. Page started rolling
out to businesses in May 2009. On October 24, 2007,
Microsoft announced that it had purchased 1.6% of
Facebook's shares for $ 240 million, giving Facebook the total
price. is worth about 15 billion dollars. Microsoft's acquisition
includes the right to place international ads on social
networking sites.
- In October 2008, Facebook announced it would establish an
international headquarters in Dublin, Ireland. Nearly a year
later, in September 2009, Facebook said that for the first time
it had turned positive cash flow. A Compete.com study in
January 2009 ranked Facebook as the most used social
networking service by monthly active users worldwide.
- Source of access to Facebook increased steadily after 2009.
The company announced 500 million users in July 2010, and
according to its data, half of the members of the site use
Facebook daily, in average. on average 34 minutes, while 150
million users accessed the site with their mobile phones. In
November 2010, based on SecondMarket Inc. (a stock
exchange of private companies), Facebook's value is $ 41
billion. The company surpassed eBay to become the third
largest US web company after Google and Amazon.com.
- In early 2011, Facebook announced plans to relocate its
headquarters to the former Sun Microsystems campus in
Menlo Park, California. In March 2011, it was announced that
Facebook deleted about 20,000 records a day for violations
such as spam messages, graphic content and underage use, as
part of efforts to increase security. network security.
DoubleClick statistics show that Facebook reached one
trillion page views in June 2011, making the site the most
visited by DoubleClick statistics. According to a Nielsen
study, Facebook in 2011 became the second most visited
website in the United States after Google

D. Revenue of Facebook
- Facebook ranked 76th in the list of Fortune 500 in 2018 of
the largest corporations in the United States by total revenue.
The majority of Facebook's revenue comes from advertising.
Microsoft is a special partner of Facebook for banner
advertising services, and Facebook only posts ads within
Microsoft's advertising network.
- According to comScore, an internet market research
company, Facebook collects a lot of data from visitors like
Google and Microsoft, but less than Yahoo! In 2010, the
company's cybersecurity team began to expand efforts to
prevent users from harm and destruction. On November 6,
2007, Facebook launched Facebook Beacon to prevent
attempts to advertise to members' friends using that member's
personal information.

Year Revenue Growth

2004 $0.4 —
2005 $9 2150%
2006 $48 433%
2007 $153 219%
2008 $280 83%
2009 $775 177%
2010 $2.000 158%
2011 $3.711 86%
2012 $5.089 37%
2013 $7.872 55%
2014 $12.466 58%
2015 $17.928 44%
2016 $27.638 54%
2017 $40.653 47%

1) What are the characteristics of Facebook ‘s

decision to IPO?
- Normally when listed on the stock market, most of the sold
shares are newly issued to increase capital for the company.
But when Facebook went public to be listed on stock market,
more than half of the stock was sold by existing shareholders,
because they thought prices would fall.
- Hundred thousands of investors were hoping to gain benefit
when Facebook first offered shares to the public (IPO) and
was listed on the stock exchange on May 18, 2012. The New
York Times said that Asian investors registered to buy
Facebook’s shares 25 times higher than the number of shares
launched.
- Many of these investors may now regret their initial
excitement, after losing about 25% of their investment and
owning an ever-declining stock. In fact, Facebook's exposure
to the exchange has all the hallmarks of a catastrophic
catastrophe and the smart money immediately recognizes that.

- Even James Gorman, chairman of Morgan Stanley Bank that

set the IPO price of Facebook, admitted in an interview that
investors who bought Facebook were "naive" to think that
stock prices would go up.
- Normally, when being listed on stock market, most of the
sold stocks are newly issued, in order to increase capital for
the company. Existing shareholders are only allowed to sell
shares after a specified period of time, at least 6 months, and
after the stock price has stabilized in the market. However,
when Facebook went public, more than half of the shares
(57%) released were sold by existing shareholders, such as
employees working at Facebook from the early days, or
financial institutions. This is very unusual and suggests that
insiders sell their shares at floor prices, as they expect prices
to fall.

- The size of this first issue also made people worried. If the
company thinks the stock price will go up in the future, it will
sell only a small portion of its stock in the first issue and
continue to sell more when the price has risen.

- This is a common tactic used in high-tech companies' IPOs.

However, Facebook was massively selling its shares,
indicating that it seemed they did not want to have to go back
to the stock market again in the future.

- Another confusing thing is that Facebook actually does not

need cash. They held about $ 4 billion before the first release.
And they have added $ 6.7 billion through the IPO.
=> So why does a company have to go on the floor when
they don't need cash? - The answer may be that they think
this is a good opportunity to easily make more money on the
stock market.

2) Advantages and disadvantages for Facebook's

IPO :
- Advantage: The reason for Facebook's IPO is fundraising.
Selling the stock to the public will give the company financial
resources to run its business, expand its scale, and buy other
companies. The IPO was a great success for Facebook and
their longtime investors

- Disadvantages: This IPO has revealed the major

disadvantages of the Nasdaq stock exchange, which made the
event that should have been a great success turn out to be a
failure:

1) Banks, led by Morgan Stanley, overvalued the IPO :

- Last week before the listing, the press reported that many
people were scrambling for this social networking
 stock. That information facilitated Facebook and its
people, especially Morgan Stanley, to raise its share price
from $ 28 to $ 38, while increasing the number of shares
sold. Many experts, including financial analysts and
journalists - predict that the launch date will be the
hottest day of stock boom in recent years. Even quite
conservative people think that the stock price will close
to 46 USD.
- Although the responsibility of the issuing company is to
support the best floor price, but the fact is that Morgan
Stanley and partners have bet a tough fight to "back" for
Facebook shares. , and the last trading minutes of the
first day of trading show signs of failure. Artificial
demand has distorted market value and cannot last
long. On Monday, the stock price dropped 11%. When
Morgan Stanley no longer fended off, the market valued
Facebook at just $ 34, which is less than $ 10 billion in
market capitalization.

2) Facebook's basic financial data doesn't prove that the

stock value is so high
- Despite being overpriced at $ 104 billion, then $ 93
billion after that is still considered too high. Shortly after
 Monday's tragic sell-off on the exchange, investors on
Facebook still bet on the belief that its revenues and
profits will soar over the next few years. With a profit of
$ 1 billion last year, Facebook has an extremely high P /
E of 93.
- According to estimates by extreme analyst Henry
Blodget, Facebook's P / E will be at least 40. In the
meantime, Apple's P / E is 10 and Google is 12. During
the day Facebook shares fell 11%, Apple rose to 6% and
Google rose 2.3%. This seems to indicate that investors
are choosing safe alternatives instead of taking risks with
Facebook.
- Meanwhile, Facebook's revenue growth is slowing, and
many questions are raised about the company's
advertising business. Mark Zuckerberg made it clear that
his first priority was on social media over
profit. Therefore, investors should consider when buying
stocks, even if prices drop further. 

3) Nasdaq cannot rely solely on big IPOs

- The Nasdaq Stock Exchange has lobbied very vigorously
for the right to offer Facebook to rival NYSE
 Euronext. But when the big day came, the system went
wrong. Trading was delayed for more than 30 minutes
due to trouble in matching buy and sell orders. Trading
in millions of stocks has not been confirmed and some
investors did not receive the order notification hours
later, even until the next day.
- This caused some investors to be discouraged from
further trading and that ruined Nasdaq's big party. A
transaction manager also called it "the worst performance
in IPOs ever".
- One thing is for sure: Nasdaq has been criticized for one
of its proudest times, having welcomed the most
prestigious IPO in the last 10 years. "It's a bad time," said
Robert Greifeld, director of Nasdaq OMX Group. He
blamed the department's trading software for being
poorly designed, which is ironic for a well-known
exchange for technology companies. The US Securities
and Exchange Commission is investigating the incident
at Nasdaq and the results of the investigation will
certainly not be good for Nasdaq's reputation.
4) Ordinary investors should stay away from epic IPOs
like Facebook
- It is sad evidence for the current state of the capital
market as the public is advised to stay away from large
IPOs. The general purpose of the IPOs is to give
companies the capital to grow their business, and to give
investors the opportunity to own a part of the most
potential companies.
- But the truth is that the value of Facebook has gone up so
big - thanks to a huge amount of venture capital of $ 2.2
billion - that by the time the offer goes public, the price
has been pushed up too. high. In other words, many
stumbling investors and companies (including Goldman
Sachs, invested $ 500 million last year) pushed prices so
high that ordinary investors were left out.
- The IPO system only reflects its value when it maintains
a balance between public and private investors," said an
expert. "If the equilibrium is broken and almost all "The
advantages are all within the company, ordinary
investors should refuse to participate in this game. A
failed IPO will cause damage to all parties.
 - Clearly, the IPO of Facebook left many shortcomings.
Facebook's IPO was marred by greedy valuation, not to
mention the incident on the first trading day. Some argue
that not having a boom in the first days of trading is a
good thing - because otherwise ordinary investors suffer
more. It is also a lesson that makes banks and securities
companies more cautious in the future

=> The worst thing, however, is that Facebook's IPO

has once again proved the point that Wall Street is an
opportunity for big companies and banks to "pocket"
ordinary Americans.

3) Which stock exchange does Facebook decide to

IPO? Why choose that stock exchange?
- The largest social network in the world Facebook has chosen
the Nasdaq as the listed market for the issuance of shares
initial public offering (IPO)
- Massive marketing campaigns, extremely attractive
incentives are in turn led by the leaders of the two famous
stock exchanges Nasdaq and NYSE. The costs of IPO and
listing maintenance are not a big problem for the $ 100 billion
assets that Facebook owns. 
=> But in the end, Facebook chose Nasdaq as its "manager"
*The reason why Facebook chose Nasdaq :
- Analysts say that the reason Facebook chooses to choose any
of the two platforms is mainly based on reputation and image. 
- However, a little deeper analysis, the differences between
the two floors can find interesting information.
- Currently, NYSE is the floor with the largest number of
listed stocks on the US stock market and is often the first
choice of blue-chip stocks. However, the names on this floor
are often the "old", reputable companies that have been built
firmly.
- Meanwhile, the Nasdaq Composite index exclusively for
Nasdaq technology companies is never absent on the US stock
index listing. In particular, it is impossible not to mention the
shares of the world's great technology giants, Google,
Microsoft, Intel and Apple, which are also managed by
Nasdaq.
- On the other hand, Nasdaq is also often the choice of
companies with a growing trend. By putting your name on the
list of stocks listed on Nasdaq, Facebook Inc. could also make
investors more optimistic about the company's growth
momentum.
- The trading style of these two exchanges may also be part of
the reason affecting Zuckerberg's decision. NYSE is known as
centralized trading platform, through brokers.
- Nasdaq, meanwhile, is an exchange that operates entirely
through telecommunications systems, a similarity to what
Facebook has built.