Not only is today the first day of February but it’s also a day that will make history in the tech world. Facebook is set to file a $5 billion IPO. The estimated valuation of the company ranges between $75 to 100 billion. Will Facebook’s meteoric rise to IPO translate to great returns for investors?
From the outside looking in it seems as though this is going to be extremely appealing to the consumer. Will this be the same case for potential investors? There are definitely some uncertainties about whether Facebook will actually make a significant profit. In 2011 we saw numerous tech IPO’s that didn’t fare as well as anticipated: LinkedIn, Zipcar, Zynga.
Yes, Facebook is in a league of its own but I don’t think everyone will be calling their stockbroker the day the company does go public.
The Meteoric Rise of Facebook
- February 2004: A second year computer science student at Harvard named Mark Zuckerberg (heard of him?) and some buddies created “The Facebook”. By December of 2004 they had 1 milion users.
- 2005: I joined April of 2005 when it was still called “The Facebook” and you needed a school email address to join. I was one of 45 people in the York University network. At the time it just seemed like a better platform than Myspace. Never did I imagine that the company would grow to what it is today. In December 2005 Facebook had 5.5 million active users.
- January 2012: Facebook has 800 million active users and they are poised to launch one of the biggest IPOs in history.
Will Facebook Deliver?
Like all the other users, I’ve been frustrated with the interface and usability of the site along with the privacy settings that seem to change on a daily basis. So I’d say that Facebook is far from being a sure bet. But they do have a history of growth that would seem to make them a good investment over the long term. As long as the price isn’t too inflated. In any case, I can’t wait to see what happens. I might even jump in after the dust settles.
Forbes Video: Facebook’s Road to IPO
Steve Schaefer of Forbes magazine gives his take on the Facebook IPO and what the social media giant and investors can learn from the initial public offerings of Groupon, Zynga and others.