Facebook, the powerhouse social
networking site; Twitter, offering social networking and micro-blogging service; Zynga, popular
maker of online games; and LinkedIn, the business-oriented social network (or
the `Facebook for professionals')—all have one thing in common: none of them is
a publicly-traded company. Each one is privately-held. However, this does
not stop the interested individuals from trading in its shares.
The movement of private shares in the past has been largely
impervious, but recently, with the advent of buyer-seller matching services such as
Second Market and Shares Post, a red-hot trading market has developed in
the shares of the world's leading social networking companies—Facebook,
Twitter, Zynga and LinkedIn.
Though the firms remain private, they have shares, and some employees
and investors who have received and bought such stock can trade, subject to
conditions. Only institutional investors or wealthy speculators, who look to grab
a piece of the next Google, Apple or Microsoft before the rest of the
investing public, can buy the shares. The shares are generally sold by former
employees or early investors looking for exits.
Shares of the privately held companies can be traded on private
stock exchanges such as Second Market, based in New York and Shares
Post based in San Bruno, California. Second Market, a leading trading
exchange handling transactions in private securities, is estimated to
have executed about $400 mn in trades across about 40 private companies
in 2010, which is approximately a quadruple increase over 2009, the
first year it began making markets in these companies.
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