The long-awaited Facebook IPO is finally arriving - and it's time for Mark Zuckerberg to share the love.
But most of Facebook's 800 million users won't get a chance to grab a piece of the multibillion-dollar deal.
Instead, the shares will be reserved for the wealthiest investors, not the loyal users who have fueled Zuckerberg's rise to riches.
Before Facebook, Zuckererg was just a college student....
Today, Zuckerberg's net worth is $17.5 billion and he's ranked No. 52 on the Forbes list of billionaires - No. 22 in the United States - and No. 9 on the Forbes list of powerful people.
"Zuckerberg made history with Facebook - and now he's the king of social media and social networking - the man with the Midas touch," said Money Morning Capital Waves Strategist Shah Gilani. "But now it's time for him to give some of the gold that he's earned as the head of Facebook back to the people who helped make that happen. They're the ones who have brought his company to the forefront. They're the ones who should be participating in this."
So, how could Zuckerberg use the Facebook IPO to give back to those who've helped him become an Internet legend?
Gilani has a plan for that...
The Facebook IPO Lottery
Gilani suggests Zuckerberg reserve a portion of the potential $100 billion IPO for Facebook subscribers - since they're the folks who really made Zuckerberg the king of social networking (as well as one of the youngest billionaires in history).
Giving Facebook subscribers access to shares at the offering price would actually be simpler than it might seem, Gilani insisted. Facebook could reserve 20% of the IPO shares for Facebook subscribers, and then dole those shares out via a lottery, Gilani said.
Gilani first shared his idea for a Facebook IPO lottery during a June 2011 appearance on the FoxBusiness "Varney & Co." program, and discussed it again with host Stuart Varney when he revisited the show yesterday (Monday).
"I think the shares of Facebook are going to be highly coveted in the IPO realm, and I think there's going to be worldwide demand for it," Gilani told Varney. "So the investment bankers, the underwriters, are going to parcel those shares out as they normally do to their favorite elite clientele that they want to support."
Given that the Facebook IPO is likely to be one of the hottest ever, Gilani said that his proposal would probably be the only way the average investor could get a piece of the company at the offering price.
Without such a reserve, retail investors who really want to own Facebook shares will be forced to buy in on the secondary market after Facebook's share price has experienced what's expected to be a stratospheric zoom.
Zuckerberg's Second Act
"Facebook was Act One for him," said Gilani. "This kind of pioneering move with the Facebook IPO could be Act Two - the encore. If social media is a force for good, this would be Zuckerberg's opportunity to once again prove he's a real social innovator."
And altruism doesn't have to be the sole motivation for Zuckerberg, either.
The company's most ardent subscribers are likely to be deeply loyal shareholders, too - especially those who get into the Facebook IPO via the lottery. Those folks will probably view the shares as more of a badge of honor than an investment, and will be loath to dump them during tough times. And that will help put a floor under Facebook's stock price, Gilani insists.
"Most of these people are very likely to hold onto their shares - recognizing that they're part of the social-networking group that broke historic new ground," Gilani said. "Zuckerberg will see that it's just good business."
Gilani said such a move would show Zuckerberg truly believes in the social networking trend he's helped evolve.
"Mark Zuckerberg should stand up and say: "This is what social-networking is all about.' He should be the point man," Gilani said. "You're already a pioneer. How about doing this for your Second Act? You're already a billionaire, you're already one of the richest men in the world. You've already done all that. But here's a chance to really make a mark, to break new ground, and to make a statement. You claim that your real interest is in the advancement of social networking. Here's a challenge that will prove it."
Facebook Inc. could file papers for an initial public offering as soon as Wednesday.
The social media giant is looking at a deal that could value the company between $75 billion and $100 billion.
News and Related Story Links:
- Money Morning:
'Facebook Rule' Would Delay IPOs, Open Door to Secondary Market Excesses
- Money Morning:
Goldman Sachs (NYSE: GS) $450 Million Investment Fuels Facebook IPO Speculation
- The Wall Street Journal:
Facebook Readies IPO Filing for Next Week
- Varney & Co.: