In the wake of the announcement this week of Facebook’s long-awaited initial public offering (IPO) comes disturbing news. For those who do not understand what the IPO means to Facebook, it supposedly signals the transition of the company from being privately held by its CEO Mark Zuckerberg and a group of investors to being (again, supposedly) owned by public investors.
Shayndi Raice, Anupreeta Das, and Lynn Cowan of The Wall Street Journal recently ran an article stating that many Facebook insiders plan to “cash out” rather than “cash in” on Facebook’s IPO. They wrote,
The WSJ also noted auto giant GM is pulling its ads from Facebook, claiming they do not “pay” on the popular social media site.
Some of Facebook Inc.'s biggest investors now plan to cash out as much as half of their stakes in the social network's initial public offering this week. Facebook said Wednesday it will boost the size of its IPO by 25%, or about 100 million shares, as early investors sell as much as $3.8 billion in additional shares. Goldman Sachs Group Inc., Tiger Global Management and Facebook director Peter Thiel—who was one of the social network's first investors—more than doubled the amount of stock they plan to sell.
To this PR professional, this all sounds like major trouble for the social media site and its PR activities (and especially for its agency of record). IPOs are supposed to generate confidence in a company going from private to public, not cause concern among financial markets. How FB handles this particular crisis from a PR standpoint should be intriguing. There also of late have been rumors the social media craze or “bubble” is about to go “pop” much like the dot.com bubble did in the early 2000s.
Whatever the case, the next few months for the social media world and PR are going to be interesting.