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Facebook Stock Goes on Sale

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This is the VOA Special English Economics Report, from http://voaspecialenglish.com | http://facebook.com/voalearningenglish

Facebook is the world's biggest social network. It has over nine hundred million users worldwide. And it reported $3.7 billion in sales for last year. The company has been privately held since two thousand four. That was when Mark Zuckerberg and several classmates at Harvard University started Facebook as a business. But on May eighteenth, Facebook becomes a publicly traded company. That means its shares will be listed on the NASDAQ stock market, and sold to the public. Interest in the stock kept building after Facebook announced details of its initial public offering, or IPO, earlier this year. The IPO will make billionaires of the company's founders, including Mr. Zuckerberg. Eduardo Saverin, a Brazilian-born co-founder, has been strongly criticized for recently giving up his United States citizenship. By doing so he will avoid a fifteen percent tax on the value of his shares. He now lives in Singapore.Shortly before the trading started, Facebook told the Securities and Exchange Commission that it wanted to increase the number of shares being offered to over four hundred twenty million. The company had earlier said it planned to offer three hundred thirty-seven million. The starting price was set at thirty-eight dollars, also an increase. Some financial experts say Facebook could raise sixteen billion dollars, making it one of the biggest IPOs ever.Most of Facebook's revenue comes from online advertising. But the company also says it expects to earn money from fees charged on the sales of virtual goods. These are digital products used in social games, not physical goods. Facebook says it sees important income coming from this new market, which could reach fourteen billion dollars by twenty sixteen.Not everyone is pleased. General Motors ended its advertising agreement with Facebook just before the stock began trading. The carmaker said it did not see results from the millions of dollars it spent on advertising with Facebook.And Facebook has been criticized for some recent business decisions. It offered one billion dollars to buy Instagram, an application for sharing photographs. The deal requires government approval and has yet to be finalized. So is Facebook worth the price of the stock? That will be for investors to decide.For VOA Special English, I'm Alex Villarreal. You can read, listen and learn English with more business stories at voaspecialenglish.com. (Adapted from a radio program broadcast 18May2012)
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