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Facebook Inc. (FB - Analyst Report) is making its first stock offering since its IPO in May 2012.The company has decided to sell 70 million shares amounting to a total value of $3.85 billion.

As per Facebook’s recent announcement, out of the 70 million shares, 27 million will be offered by the company itself, while 41.35 million will be offered by Mark Zuckerberg, the chief executive officer of the company.

Moreover, another board member Marc Andreessen will offer 1.65 million shares. The proceeds from the stock offering will be utilized for paying taxes incurred from exercising options.

The stock offering corresponds to the company’s inclusion in the Standard & Poor’s 500 Index, which is expected to create demand from index funds and other financial institutions planning to buy Facebook stock. We believe this is a good move by the company, as the share price continues to move upward.

The secondary offering reflects the growing popularity of consumer focused social-media providers in the U.S. The company is making every possible move to raise more funds, for business expansion. The company is taking up new projects and has ambitious expansion plans to move ahead in future, one of them being the company’s recent association with, Qualcomm (QCOM - Analyst Report)) and other technology companies, if successful, will aid the company.

It is aimed to connect nearly 5 billion people who do not have access to Internet. This combined with its massive user base and its ability to track personal details over time, make it a formidable force in the online ad market. So, we believe the funds raised will be used prudently.

Although Facebook is favorably placed, issues like other modes of advertisement and communication and increasing competition have affected other social media stocks like LinkedIn Corp. (LNKD - Analyst Report) and Yelp Inc. (YELP - Snapshot Report).

Facebook, currently, has a Zacks Rank #2 (Buy).

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