Post date: Jan 31, 2012 2:1:6 PM
Speculation of a Facebook initial public offering has put the leading social network under the microscope, especially when it comes to estimates the company could be initially valued at up to $100 billion.
USA-FACEBOOK DOLLARS -There could soon be a lot of celebrating at Facebook's California headquarters, with the leading social network ready to file for an initial public offering this week, according to the Wall Street Journal.
If that report holds true, going public could initially value Facebook anywhere between $75 billion and $100 billion, after what would be one of the biggest IPOs ever. Anupam Palit of GreenCrest Capital estimates Facebook's value at about $92 billion.
ANUPAM PALIT, SENIOR EQUITY ANALYST, GREENCREST CAPITAL SAYING:
"When you think about Facebook, in a lot of ways we are talking about the social media space and this sector, Facebook really defines the opportunity around this. We weren't really talking about social media before Facebook came along. It is the biggest company in this space and we believe what it makes it very unique from every other company that went public last year in this space is that it is very, very profitable."
But a potential IPO from Facebook comes at a time when other Internet IPOs have not lived up to pre-debut hype. The performance of LinkedIn, Groupon, and Zynga shows market enthusiasm often wanes after the IPO - leading to speculation Web 2.0 is over-valued just like Web 1.0 was back in the late 1990s.
CONWAY G. GITTENS, REUTERS REPORTER SAYING:
"For Wall Street it all comes down to the numbers. Facebook says it has over 800 million users worldwide. That's a lot of eye balls for potential advertisers."
And that means money in the bank for Facebook, something web companies did not have during the tech IPO frenzy more than a decade ago.
ANUPAM PALIT, SENIOR EQUITY ANALYST, GREENCREST CAPITAL SAYING:
"When you tell someone like Facebook that you like skiing for example or that you like music or like a particular good shoes - they can take that data, package it up, sell a specific demographic data to advertisers and advertisers can pay Facebook to target specific audiences. So what they are able to do is sell advertising in a way that nobody has ever done before."
But just because nobody has ever done it before, doesn't mean Facebook is the only one that can do it. Cash-rich Google is busy building Google+, its social network, and micro-blogging website Twitter is also seen as a threat.
Analysts quickly point out Facebook has to continue to innovate in order to stay ahead of technology that may not even be out there yet - or find itself the next MySpace - a hot property that quickly cooled.
Conway Gittens, Reuters