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Facebook Insiders Pounce On IPO Frenzy — Now Dumping 85 Million More Shares On Muppets
OH, PLEASE, NO: This Guy Wants To Bet His Daughter’s College Fund On Facebook
Facebook Is “Muppet Bait”
Lise Buyer, a whipsmart former technology analyst turned IPO whisperer who helped Google prep for its 2004 public offering, thinks Facebook may be the last fast-growth tech stock individual investors will be able to bet on for a long while.
The reason, she told Fortune’s Dan Primack: the recently passed JOBS Act allows companies to stay private until they have 2,000 shareholders.
Under the old rules, companies had to start disclosing their financials like a public company after they had 500 shareholders — so companies like Google and Facebook decided they might as well go public.
The changes are good news for early investors and employees, who will reap more of the gains:
[We] can expect early investors and high-net-worth folks to hold on through the entire growth phase, since by the time a company has 2,000 shareholders, it is much more likely to exhibit growth patterns associated with more mature entities.
It’s a smart argument. But with the growth of secondary markets which allow for the trading of private shares, and deals in which later-stage investors cash out employees and angel investors, that’s been happening anyway.
It’s a far cry from the ’90s, when individual investors could place wild bets on Internet companies which were going public with double-digit headcounts and barely any revenues, let alone profits.