Mark Zuckerberg, probably one of the coolest people on the planet, is about to become the 23rd richest person on Earth.
Not too bad for a 27 year old!
The Wall Street Journal is reporting that Facebook Inc., the world’s uber giant social-networking site, is aiming to file for its IPO as early as Wednesday, February 1st, 2012, though timing of the filing is still being discussed and might change.
The company is discussing a valuation of $75 billion to $100 billion and the IPO would provide funds to help Facebook maintain its expansion and fend off competition from Internet rivals such as Google and Twitter Inc. The company has discussed raising $10 billion in the offering, and supposedly, Facebook plans to set its price at the low end of the valuation range to entice investors and ensure the stock rises after the IPO.
Morgan Stanley and Goldman Sachs are rumored to be orchestrating the deal.
The hype behind Facebook’s IPO is huge, but is it worth it? Social media IPOs have not faired well in recent times. In fact, something around 80% of such IPOs are now trading below their offering price or near it (Groupon comes to mind). Furthermore, when you invest in a company, you are banking on their potential to grow. Can Facebook possibly grow any bigger? Perhaps, but I think they are very close to maxing out on growth (users).
However, the stock does look promising. Facebook’s hype is HUGE as I mentioned, so especially if they do end up employing the strategy of pricing low at first, many people will partake in the IPO, thereby driving up the price. There has also been a lot of work on top line revenue growth which is projected to gain some traction (though many people would never pay a dime to use facebook, they are finding other avenues, such as advertising, to capitalize).
Will you be buying (stock price is speculated around $40)? Despite the cautionary flags, I am a Facebook fan, and I do have a strong inkling Facebook will take off just like Google did when it first IPO’ed, so yes, I will be drinking the Facebook kool-aid and will purchase a few shares. I just won’t be putting my life savings into it.