A number of media sources are reporting that Facebook will file for an initial public offering next week.
Apparently,Morgan Stanley is to be the lead underwriter. Goldman Sachs is also expected to play a major role.
Facebook, with its 800 million members, has become the new standard platform for communication between people.
The IPO is expected to raise about $10 billion with a valuation of at least$75 billion. By comparison, Google (GOOG) raised $1.9 billion in an IPO with a valuation of $23 billion back in 2004.
Previously the largest technology IPO was done by Infineon (IFX), a former semiconductor subsidiary of Siemens (SI).
The big question for investors is should they buy Facebook stock.
In the coming days, there will be much analysis of revenues, profits, gross margins, cash flow, growth rates and the like. Certainly, such analysis will be of interest to talking heads, newsletter writers, and academics. Media will love the story as it will generate more page views, sell more magazines or put more eyeballs on the TV screen at CNBC, Bloomberg and Fox.
From a practical point of view for an investor, doing the foregoing analysis is an unnecessary torture of brain cells. None of the traditional fundamental analysis is going to matter.
The reality is that underwriters will price the IPO based on demand under the ruse of comparisons with recent internet IPOs such as Zynga (ZNGA), LinkedIn (LNKD), Pandora (P), and Groupon (GRPN)…Read More at Forbes.
