Mid-day Update

GM pulls out of Facebook advertising

David Brancaccio and Jeremy Hobson May 16, 2012

Facebook is expected to begin selling stock to the public on Friday, a deal that could value the company at more than $100 billion, and today we’re learning that more shares of stock will be offered than originally expected.

But one of the world’s biggest advertisers will no longer put ads on the social networking site Facebook. Just days before Facebook stock trades publicly for the first time, General Motors is giving no official reason for the decision but published reports suggest the ads aren’t having the impact GM hoped.

For it’s part, Facebook says demand for its new stock is so high, it’s going to increase the the size of its initial offering by about 25 percent.

An analyst at GreenCrest Capital says the offering is no longer about the numbers, but “This is much more a spectacle, a media event, and a cultural moment.”

But does GM’s move show a certain weakness in the Facebook business model?

Here to talk with us in today’s Mid-day Extra is Eric Clemons, a professor at the Wharton School of Business at the University of Pennsylvania

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