Facebook IPO

So as some of you people already know. Facebook held an IPO a few days ago (18/05 to be exact) and a lot of people hadn't even heard of IPO before this (me included, which is not that interested in stocks). So what is an IPO? IPO stands for "Initial public offering", which is often called "stock market launch". As the name suggests, it is when a company starts selling stocks to the public. Here is a quick summary of what happened and the state of the stocks as of the time writing this.


Facebook used to be a private cooperation owned by pretty much ~7 people including the very famous creator Mark Zuckerberg. A private cooperation can only really be owned by a very few number of peoples and while stock can be sold and traded, it's usually kept secret. Anyway, the point is that stock can't be bought on the regular stock market which makes it very difficult for people like you and me to actually buy Facebook shares.
However, Facebook is now a public company which means that the stock is sold on NASDAQ, and that means anyone like for example you and me can now buy a piece of Facebook.

Why did Facebook decide to become a public company? Well, there are a few drawbacks to being a public company and most of them are related to regulations which Facebook have to follow, as well as it being quite a bit more expensive. However, the good thing is that the people who own(ed) a lot of Facebook stock can now sell it to the public, which means the people who own(ed) lots of stock can now make a lot of money by selling their shares. Another good thing for Facebook is that they can now raise a lot of money very quickly if they for example want to buy some worthless software for a billion dollars, simply by selling stock.

BUT! Just so you people know. The stocks on the NASDAQ is not directly from Facebook. Investment-banks buy the stock and then the banks put them up on the stock market, for a slightly higher price than what they initially bought the stock for. Cleaver huh?
Well, Facebook stock initially sold for ~42 USD per share. Do you want to know the current price, 3 days after? Around 34 USD. That's a drop of almost 20%.
If you bought 1000 USD worth of stock 3 days ago, then that's only worth ~800 dollars today. The stock price has dropped with over 10% only today, from 38 USD to 34USD.

For the latest stock prices please check out Facebook on Google Finance.

Update (22/05): Facebook stock is still falling. It is now down to 31 USD, which is a drop of over 26% from the initial sale.