The social media site, Facebook, just recently went public. For millions of users worldwide, it was a much-anticipated day. However, shareholders just learned that the company will not be issuing paper stock certificates. It will go all-digital.
According to an article from money.cnn.com, titled, “Facebook scraps its paper stock certificates,” Facebook isn’t the first company to not issue paper stock certificates. Other major companies that don’t offer paper stock certificates are Apple, Intel, and Microsoft. These are all major companies that rely heavily on digital technology, so it doesn’t surprise me that they don’t offer paper stock certificates.
A upside to not issuing paper stocks is that it does save the company some money in printing costs. Also, it can be easier for some customers who prefer digital. On the other hand, it alienates the older population who may want to purchase a paper stock certificate. This in turn may reduce the number of stocks that are sold, which could be detrimental to the company. So the savings in printing costs may not outweigh the money that could have been made from selling paper stock certificates.
A downfall to not offering paper stock certificates is that paper stock certificates often become collector’s items. The paper certificate sometimes is worth more than the stock itself. Here is a short excerpt from the article about the price of paper stock certificates:
“A share of Apple (AAPL, Fortune 500) currently sells for around $560, but on Scripophily.com, a website that deals in old certificates, a 1998 Apple stock certificate will set you back $695.”
Another downfall is that many supporters sometimes just buy one paper stock certificate as a memento. They never intend to sell it. According to the article, Lance Lee, CEO of OneShare.com, said,
“’Look at it another way: You have a group of people that are buying your stock and never plan on selling it. These people don’t see themselves as customers. They see themselves as part-owners.’”
What are your thoughts? Do you think paper stock certificates will soon be a thing of the past? Do you think it is a smart move for companies to not issue paper stock certificates or will it hurt them in the long run?
- Facebook scraps its paper stock certificates (money.cnn.com)