This is MediaShares’ discussion of Facebook’s IPO, weighing the advantages of using Direct Registration to sell shares directly to Facebook's online users without the typical underwriter. David Ebersman, Facebook’s CFO, has stated that the company may not work with underwriters to sell their shares. If Facebook does not use underwriters, they will need to sell their shares using Direct Registration, the main component of MediaShares’ methodology.
Key Points of the Facebook IPO:
1- If Facebook works with an underwriter, they WILL NOT KNOW WHO THEIR SHAREHOLDERS ARE - their underwriter considers them to be the Underwriter's customers, not Facebook's customers.
2- If Facebook completes their IPO using Direct Registration (MediaShares or others) they will have incredibly valuable demographic information on each shareholder: Social Security number, age, home address, INCOME, and even the share purchaser’s ACH CHECKING ACCOUNT INFO. Facebook already knows each users interests, and by adding an instant payment method (ACH debit) for each user, Facebook will become the world’s most powerful marketing and fulfillment company.
3- If Facebook sells their shares directly to their users, without an underwriter, there will not be a "green shoe" allotment of shares to the underwriter.
4- The underwriter will not be able to NAKED SHORT THE SHARES which is NOW PERMISSIBLE in an IPO by the SEC!!!!!
5- Facebook will save 7% on the underwriter's IPO commission!
6- They will save the underwriter's up-front charges