As the author of ‘Zuckerberg’s rocket, ready for lift-off’ predicts, Facebook’s IPO could potentially establish the share price between $34-$38. With the company’s current revenue of $3.7 billion, the process of initial public offering could raise another $12 billion, increasing Facebook’s valuation to over $100 billion.

With such high potential brand value, Facebook’s reach will further extend. The growing customer base is essentially what enables the company to generate profit. With advertising being the number one source of revenue for the company and a growing customer base, it is essential that Facebook adapts its marketing to the fast-paced environment.

‘[Facebook] also intends to explore a host of other areas, from payments to “social commerce”’ suggests the article, indicating that Facebook is planning on expanding their current business model and going to offer a greater diversity of products.

Will the IPO cause the Facebook advertising costs (for other companies) to increase? Would an increase in advertising costs result in a lower demand or would it make Facebook even more profitable? In contrast, if the share prices go down after the IPO – how will that impact the Facebook advertising opportunities (reminder: Facebook generates 2/3rd of their profits from advertising)?

Author unknown, ‘Zuckerberg’s rocket, ready for lift-off’, 25/09/2012, http://www.economist.com/node/21554532