Today, I stumbled on “The stock market is for suckers,” an article in Macleans about the growth of Facebook and some of the interesting investment issues surrounding that company.
Thus far, Facebook has preferred to remain a privately owned company, resisting calls to sell stock on the public market. But investors, who would like to get a piece of the Facebook pie, are itching to sink money into the company. To complicate matters, the SEC mandates that privately-owned companies have less than 500 shareholders or they must become publicly traded, which prevents many people from being able to invest in Facebook.
The solution? Goldman Sachs is working on a deal with Facebook to become a private investor in the company. It then plans to divy up it’s investment and sell it to some of it’s high-profile customers. Facebook gets to comply with SEC regulations, and investors get their chance to sink some money into Facebook. Seems like everybody wins.
Unfortunately, at least according to the analysis in Macleans, stories like this are indicating a massive shift in the way investment happens in America. Companies are becoming more and more wary of going public and are instead working out deals with high-powered investors. This, in turn, hurts the ability of the average American to access investment opportunities.
Will this be a problem long-term? Perhaps only time will tell.
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