Facebook launches its long-awaited initial public offering today, expected to be the biggest IPO for a U.S. tech firm.
Today’s offering will also mark history’s second largest for any industry: Visa’s 2008 IPO was $17.9 billion at $44 a share.
“While Facebook announced on Thursday that its initial public offering of common stock would be priced at $38 a share, raising $16 billion and valuing the company at $104 billion, the shares available for purchase by the public will likely be priced higher,” reports ABC News. “That’s causing many analysts to caution individual investors not to rush into making any risky investments.”
Some analysts suggest that there are long-term risks in a Facebook investment. Despite its immense user base, the social network will still have to find ways of matching revenue with stock valuation.
There are concerns that going public could potentially ruin Facebook by alienating its user base with changes to its advertising model, especially in the mobile space.
Analysts have also issued warnings to individual investors that institutions and “prestige clients” have already invested in what is viewed as sort of an elite lottery system.
“The elite have a chance to deliberate and evaluate the assets, and then the general public comes in later for the feeding frenzy,” said stock analyst Max Wolff, adding that chasing shares in the open market can be an expensive proposition.
There’s an interesting commentary in the Wall Street Journal this morning that asks whether Facebook risks ruin in its efforts to raise revenue that will match stock valuation. “I think Facebook’s best option is to reconcile revenue and valuation the other way around. Don’t raise revenue to fit with valuation. Instead, let the bubble burst.” http://blogs.wsj.com/speakeasy/2012/05/18/will-the-facebook-ipo-ruin-facebook/
Rob ScottMay 18, 2012 at 06:16am
There’s an interesting commentary in the Wall Street Journal this morning that asks whether Facebook risks ruin in its efforts to raise revenue that will match stock valuation. “I think Facebook’s best option is to reconcile revenue and valuation the other way around. Don’t raise revenue to fit with valuation. Instead, let the bubble burst.” http://blogs.wsj.com/speakeasy/2012/05/18/will-the-facebook-ipo-ruin-facebook/
Facebook launches its long-awaited initial public offering today, expected to be the biggest IPO for a U.S. tech firm.
2 Comments
There’s an interesting commentary in the Wall Street Journal this morning that asks whether Facebook risks ruin in its efforts to raise revenue that will match stock valuation. “I think Facebook’s best option is to reconcile revenue and valuation the other way around. Don’t raise revenue to fit with valuation. Instead, let the bubble burst.”
http://blogs.wsj.com/speakeasy/2012/05/18/will-the-facebook-ipo-ruin-facebook/
There’s an interesting commentary in the Wall Street Journal this morning that asks whether Facebook risks ruin in its efforts to raise revenue that will match stock valuation. “I think Facebook’s best option is to reconcile revenue and valuation the other way around. Don’t raise revenue to fit with valuation. Instead, let the bubble burst.”
http://blogs.wsj.com/speakeasy/2012/05/18/will-the-facebook-ipo-ruin-facebook/
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