Facebook $5 billion IPO: valuation to soar to $100 billion
Facebook $5 billion IPO is making headlines across the world. Meanwhile its valuation is set to soar to $100 billion
Mark Facebook is set to become one of the wealthiest persons on earth. When the Facebook goes public, he will be worth around $29 billion, leaving behind many billionaires in the world including Google founders, Larry Page and Sergey Brin, petrochemical tycoon Mukesh Ambani and his younger brother Anil Ambani who owns one of India’s leading telecom companies Reliance Communications.
Many people are awestruck by the rising profile of Facebook and its 27 year old founder Mark Zukcerburg who controls close to 60 percent shares of the company even after it goes public. There is a sort of euphoria surrounding the Facebook IPO, with much of the tech world speculating handsome returns to investors. But there are many people who have been saying that Facebook is a big bubble that may burst very soon. Till some years ago MySpace was the talk of the town. But no one talks about them. The same happened with another Google venture Orkut.
But notwithstanding the skeptics’ view, Facebook has been making huge profits and last year replaced Yahoo to become the top provider of online display ads in the United States by revenue. This was a big achievement for Facebook and has made it an apple of investors’ eyes. Reports suggest that $10 billion IPO would be the fourth-largest in U.S. history. All the three companies that had $10 billion IPO are still among the leaders in their perspective fields. The three companies are General Motors, Visa Inc and AT&T Wireless.
Mark Zuckerburg in a letter to investors said, “Facebook was not originally created to be a company. It was built to accomplish a social mission – to make the world more open and connected. We think it’s important that everyone who invests in Facebook understands what this mission means to us, how we make decisions and why we do the things we do. I will try to outline our approach in this letter”.
While detailing his vision for Facebook he further says, “At Facebook, we’re inspired by technologies that have revolutionized how people spread and consume information. We often talk about inventions like the printing press and the television – by simply making communication more efficient, they led to a complete transformation of many important parts of society. They gave more people a voice. They encouraged progress. They changed the way society was organized. They brought us closer together”.
Notwithstanding Zuckerburg’s hopes there are people who don’t see Facebook as a good bet. A longtime social networking expert says, “…there’s always the specter of a Facebook killer on the horizon. Murdoch and company paid a huge amount for MySpace only to see the vast majority of that investment disappear in a matter of years. Something will eventually come along that makes Facebook look as dated as we think Myspace looks now”.
One unimpressed reader says, “Value??? It is a virtual business. Going public seems like a scam to me. Today you sell your VIRTUAL business (OK, so they sell advertising and who knows what else to whom… wonder) but other sites would take over sooner or later and this kid is out with big REAL bucks while the shareholders would sit on virtual paper (not even a real one to frame like the old days) 85 euro share? Well, if you are the kind of person who has 85 bucks to throw away buy one…. again, bankers and those selling the stock would make a bundle out of nothing…”
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