Facebook Vital Data
Projected Pricing Day: May 17
Projected Trading Day: May 18
Projected Price: High $34 to $38 per share
Projected Valuation: $93 billion to $104 billion
Lead Underwriter: Morgan Stanley
CEO: Mark Zuckerberg, age 28
COO: Sheryl Sandberg, age 42
Facebook is finally going public this week after much fanfare and speculation. The road-show promoting the offering got off to a rocky start with the first appearance of Zuckerberg delayed and his spokesperson claiming that he was “in the bathroom.” Things got dramatically better, with the offering now being “over subscribed,” meaning more orders than shares available. This gave Facebook the ability to raise the target price range from “28 to 35″ to “34 to 38″ per share, and insuring a nice pop in the share price once it starts trading on May 18th.
Speculation both positive and negative are all over the Internet, with growth rates and advertising revenues leading the topics. A recent Associated Press/CNBC poll shows that a majority, or 57 percent, of Facebook users “never” have clicked through on an ad. When you include “hardly ever,” that percentage jumps to 83 percent. In addition, 54 percent felt “not very safe” or “not safe at all” about purchasing clothing and goods on the network.
GM recently said it will stop its advertising on Facebook, claiming that “Facebook’s ads had little impact on consumers.”
There has been a slowdown in ad revenue growth, as reported in the company’s SEC filings going into the IPO. Some analysts claim that it is temporary as advertisers are “experimenting” with new products. But it is also evident that ad clicks on mobile devices is a problem that the company is addressing, as it is the fastest growing segment.
All in all, this does not seem to be a fad as some claim. Nine-hundred million users can’t be wrong. So expect a nice move to the upside on Friday, which all hope will help our currently weak stock market. Will we call it a “Facebook rally?”
Investors should still pay attention to trading over the next few months as the valuation we are anticipating is 27 times 2011 revenues and 99 times 2011 earnings. Pretty hefty!