The Wall Street Journal is reporting that Facebook, Inc. took steps to change corporate stock control, separating their stock into two classes. The dual-class structure gives founder Mark Zuckerberg more voting power as the CEO and gives other current shareholders the same.
The move to create a dual-class stock is a common corporate solidification strategy before offering up an initial public offering (IPO). Tech Trader Daily thinks this is exactly what the Silicon Valley social media company is planning to do.
Facebook’s official reason for dual-classification of their stock is to give existing shareholders more control over voting on certain issues. The question is, why would they do this unless they think their voting power might be subjected to outside influence? As in with a big influx of new voters, like an IPO would bring?
Another option could be a new influx of investment, but it’s unlikely an investor would be willing to put money in for sub-standard stock if the company is not publicly-traded.
Facebook denies any plans to go public, with Zuckerberg stating that this change “should not be construed to signal the company is planning to public.”
If Facebook is planning a stealth IPO, to be announced at the last minute, they are doing so next to fellow Silicon Valley startup Tesla Motors, who announced this week a similar change in corporate structure which most believe means an initial public offering will come soon. Tesla is headed by Elon Musk, co-founder of PayPal (now owned by eBay).
No analysis of what an IPO would begin trading at is forthcoming, but with The Telegraph reporting a few days ago that Facebook’s value has risen to $9.5 billion, it would be quite the lively stock.