Companies go public to raise capital, usually for expansion. Manufacturers build factories. Retailers fund new stores. That’s good for them and good for the economy. These businesses use capital investment for production, innovation, sales, and hiring.
But expansion doesn’t appear to be Facebook’s motivation.
If you read the letter from Mark Zuckerberg that was included in the SEC filing, you may notice that there is a lot of talk about Facebook’s mission, but very little about why an IPO is necessary or beneficial for the company. Is that by design?
My conclusion (see video) is that Facebook is not using this infusion of wealth to spur growth. That it will not benefit the economy generally. That it is designed ultimately to reward investors and employees: “We’re going public for our employees and our investors. We made a commitment to them when we gave them equity that we’d work hard to make it worth a lot and make it liquid, and this IPO is fulfilling our commitment.”
That’s great for FB. But is it good for anyone else?