This Facebook IPO had better go well -- there's an awful lot riding on it.
Forget all of the people, including Mark Zuckerberg annd early investors -- not to mention Wall Street firms like Goldman Sachs -- who are going to get immediately, sickeningly rich (or much richer) on the deal. They, like Facebook itself, don't need the money all that much, unless they have some epic coke habits we don't know about.
Rather, there's a whole ecosystem of secondary beneficiaries with a lot riding on this IPO, which priced at the top of expectations Thursday afternoon at $38 per share, according to CNBC, making this the biggest Internet IPO in history.
Silicon Valley Real Estate: Perhaps driven by speculators, home sales in Silicon Valley doubled in the two months after the IPO announcement, VentureBeat.com wrote recently, and sale prices have gained 15 percent. "While that’s not a conclusive cause-and-effect connection (there’s a lot more wealth in Silicon Valley besides Facebook stock), the rising real estate prices do indicate that something big is happening. Once the IPO happens and employees’ lock-up periods expire, prices will go even higher," the tech blog says. Unfortunately, it's not like Silicon Valley real estate really needed much help. Too bad Facebook isn't headquartered in, say, Georgia or Florida.
San Francisco Bay Area Economy: Facebook money is already starting to trickle down to the Bay Area economy, the Los Angeles Times reports, saying restaurants are packed, upscale stores are booming and luxury cars are flying off the lot. It's not just Facebook, though -- earlier tech IPOs and old mainstays such as Apple and Google are helping, too. And then there's the whole tech-bubble thing to worry about: "We're back to the Kool-Aid-drinking times," a Palo Alto builder tells the paper. What could possibly go wrong?
California's Tax Coffers: The Legislative Analyst's Office (LAO), a nonpartisan adviser to the California government, recently estimated the state could take in nearly $2.9 billion in tax revenue as a result of the Facebook IPO between now and fiscal year 2014-15. The bulk of that will come in the 2012-13 fiscal year, according to the LAO. And Facebook alone will count for about a fifth of the growth in personal income in the entire state in calendar year 2012, the LAO estimates. This is money California desperately needs -- though it's not nearly enough to close the state's $16 billion budget gap.
Online Brokerage Firms: The Facebook IPO could churn up some extra business for online brokerage firms like E-Trade and Ameritrade, writes MarketWatch. The CEO of Just2Trade, a smaller online broker, told MarketWatch he expected trading volume to quadruple. "There’s a lot of interest from retail customers. It translates to significant amount of trading volume," he said. But this might be little more than a temporary jump -- mom-and-pop and day traders are increasingly abandoning the stock market, and Facebook probably won't stop that trend, MarketWatch says.
Other Social Networks: Having a bunch of investors getting rich on the Facebook IPO might be enough to create demand for more social-network IPOs in the future. In fact, already-public social networks such as LinkedIn and Zynga have benefited (if only temporarily) from a bit of the Facebook-IPO halo effect, the Fiscal Times wrote recently. But the IPO pipeline is not exactly crammed full, notes Bloomberg Businessweek, which asks whether Facebook could be sucking all the air out of the market. It answers its own question, though, by pointing out that the broad market has been awful, which has kept many IPOs on the sidelines.
The Entire Stock Market: Did we mention that the U.S. stock market has not been doing terrifically well recently? The technology-heavy Nasdaq Composite Index in particular has suffered, falling more than 9 percent since late March. Sometimes all it takes to get the old animal spirits flowing again is to see a big IPO take flight. If people are willing to pump their money into a tech bubble, then shouldn't the rest of the market get happy, too? Meh, probably not. "The pop, if any, that Facebook may provide, may be a temporary distraction for traders, but material problems will likely take precedence," Rob Kurzatkowski, an analyst at OptionsExpress, wrote on Thursday.