Beware the Facebook Hype: Investors Encourage Company’s Insane IPO
Beware the Facebook Hype: Investors Encourage Company’s Insane IPO
No rational person thinks Facebook is worth $100 billion. But that’s OK—there are more than enough irrational people to make the company’s massive IPO deal happen on Wednesday.
Facebook is expected to announce its IPO registration Wednesday, and is rumored to be seeking a valuation of $100 billion. That’s more than half of Google’s market value, which stands at $188 billion. But Facebook brings in only one 10th the revenues that Google does. So how can it possibly be worth half as much as Google?
That is a question that any other company might have to answer as it tries to sell stock to the public. But not Facebook. This company is different. No matter what the price, investors will clamor to own a piece of a company that has defined social networking and has, in effect, built its own private Internet, with more than 800 million members.
Facebook reportedly aims to raise $5 billion (earlier reports guessed $10 billion) in the deal, which would take place in May and rank as one of the biggest IPOs of all time. (See chart.)
There are lots of reasons to be wary, including these:
http://www.thedailybeast.com/articles/2012/02/01/beware-the-facebook-hype-investors-encourage-company-s-insane-ipo.html
