The Pressure Of Going Public

As Facebook prepares for its IPO this week, credit unions can be grateful they’re not driven by stockholder satisfaction.

 
 

In an IPO that one Forbes writer calls "one of the most eagerly awaited events I have ever seen," Facebook is aiming for a market value of $96 billion, which would make it the most valuable company in history to go public, according to Bloomberg.

But Facebook’s long-delayed move into public markets will put new performance pressures on the company, the type of pressures credit unions relish in avoiding. It’s an ideal time for credit unions to take a moment to enjoy the fact that they operate for member-owners, not for shareholders.

As early as Tuesday evening, Facebook will have a lot of investors to answer to. The company was planning to offer 33.7 million shares at $28 to $35 and is supposedly already over-subscribed. And those new investors are likely buying into a company that is over valued, says 79% of investors who responded to a Bloomberg survey. That means Facebook may encounter some added initial pressure to perform well.

Just like the many bank customers have recently protested new fees meant to keep their institutions profitable, Facebook’s 900 million users may also encounter some operational changes. Facebook users are accustomed to using the social media site for free, without even the option of a paid version.

Will Facebook respond to its new public pressure to turn a health profit by erecting a paywall? Or will it sell more user information from its invaluable datasets on what they’re watching, playing, eating, drinking, ect.? Will users see more ads or pop-ups? Whatever the case, it is unlikely that Facebook will continue business as usual in the long-run.

Credit unions, continuing under their not-for-profit status, have no such external pressure to maximize profit and can keep member service top priority.

 
 

May 15, 2012


Comments

 
 
 
  • I belong to CACU which somehow was taken over when Carl Icahn took over TWA, only the Employee's were alowed to be members at this time. know one that I know of can figure out who or how they took this Credit Union away from us. Now anyone can belong and the Interest charges or know different from any bank but yet they pay know taxs.
    Jim