Facebook Ups the IPO Ante

by Jordan Richardson on May 16, 2012

The Facebook initial public offering could very well be the business event of the year. The social networking giant is expected to debut its IPO on Friday and, at that time, could become among the world’s newest $100 billion companies.

Back in February, Facebook was valued somewhere in the neighbourhood of $75 to $100 billion. Now, Mark Zuckerberg’s baby has increased its value estimations and jacked the price of the IPO. It also ended its much-publicized “road show” early, all the while brimming with an almost absurd level of confidence over how the IPO will play out. Heck, Zuckerberg didn’t even think he had to go to the first major briefing.

Is the company being too cocky? It’s hard to say. Investors are, for all intents and purposes, in a veritable “frenzy” over the IPO and Zuckerberg has to be loving every minute of it. Facebook now expects to move shares at around $34 to $38 each, up from the previous estimations of $28 to $35 per share. At this point, the expectation is that around 180 million shares will be moved from the company. Zuckerberg and existing stockholders will be putting an extra 157 million out in the wind, so things could prove extremely lucrative for Facebook in a hurry come Friday.

Facebook has 33 underwriters, like Morgan Stanley, and really didn’t need to do much to woo investors during its “road show” of presentations over the last while. Zuckerberg was criticized during the “road shows” for not taking the process seriously. He would characteristically arrive to meetings in hooded sweatshirts.

Regardless of Zuckerberg’s youth, it doesn’t appear that it’s going to hurt. When Facebook hits the NASDAQ on Friday as FB, trading is expected to be frenetic. The social networking giant that some discard as merely a conduit for “mindless chatter” has seen mind-numbing growth in revenue and users over the years. It is, along with Google, probably the most visited website on the planet.

The trouble for Facebook could begin when the dust settles and the party guests have gone home. After all, the company will have to generate value of some sort for investors – and it’ll have to grow even more. According to an Associated Press-CNBC poll, Facebook is a “passing fad.” If (some say “when”) users decide to move to greener pastures, the social networking site will be left holding the bag. And that bag will be filled with annoyed investors.

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Written by: Jordan Richardson. www.digitcom.ca. Follow TheTelecomBlog.com by: RSSTwitterFacebook, or YouTube.

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