Week 1 (#3): Facebook Going Public??

Facebook, the social networking superpower, is anticipated to file for an IPO this week. The funds would help Facebook maintain its expansion and fend off competition from internet rivals such as Google Inc. and Twitter Inc. The company is said to be looking for valuation between $75 billion and $100 billion, which would make it one of the most valuable technology companies in the market (behind Apple, Microsoft, IBM, Google, Oracle, Intel, and Cisco). Right now the company is trying to project investor expectations; the IPO price can't be too high or too low. Some say the price may be set at the low end to ensure the first days of trading are strong. Facebook has to be extra careful in setting a price, especially since many of the newer tech IPOs (like LinkedIn, Pandora, Groupon and Zynga) fell from their opening-day prices. A concern of some industry analysts is that the value of a social networking company is directly related to the number of users and, if user adoption slows, so could revenue growth.


What this means to the public is an opportunity to invest in the world's largest social networking site and, as long as the company continues to perform well, reap earnings! A novice investor may not want to buy at the opening, but rather see how the stock trades for a few days. Having nearly 1 billion current users, I would suspect there are many who would love to get their hands on shares of Facebook stock. To be part-owner in a company that one can so closely identify with is something special. Personally, though, I think investing in such a 'fad' company would be riskier than I'd be comfortable with. Facebook is at its peak right now, but who knows how long it will be before another technology or social networking site is introduced that may leave Facebook in the dust?


Sources:
http://www.businessweek.com/news/2012-01-31/facebook-said-to-plan-its-ipo-filing-for-as-early-as-next-week.html


http://www.cbsnews.com/8301-505124_162-57367651/will-facebooks-ipo-delight-or-disappoint/?tag=mncol;lst;3


http://www.forbes.com/sites/greatspeculations/2012/01/27/facebook-ipo-is-nigh-should-you-buy/