Evidently Mark Zuckerberg’s hoodie scandal hasn’t dampened investor spirits over (most likely) the Internet’s largest-ever IPO this week.
Facebook has raised its IPO price range to $34 to $38, according to its latest SEC filing, a significant boost from the $29-to-$34 range it previously established. Assuming it prices at the top end of that range, the company that Zuck started in a Harvard dorm room will be worth more than $80 billion by week’s end (Facebook is widely expected to begin trading Friday on the NASDAQ under the symbol “FB.”)
Facebook’s IPO comes nearly one year after LinkedIn‘s 2011 public market debut. In what was ostensibly the first American Internet IPO, LinkedIn shares rocketed 109 percent on opening day before settling in comfortably above its offer price several months thereafter.
While LinkedIn’s shares showed strength in a volatile market, other Internet stocks have not fared as well. E-coupon firm Groupon enjoyed a brief pop late last year before shares tanked (its recent Q1 results offered investors hope, however). And social gaming firm Zynga opened to a mostly tepid reception from investors.
It’s difficult to say how Facebook stock will perform in the months to come, although I’m hard-pressed to ponder a fate similar to the Groupons and Zyngas of the world. Unlike those and many more Internet IPOs, Facebook can point to real profits. Nonetheless, the company faces slowing sales growth in light of competitive pressures from Google and Twitter, and that’s a valid concern.
“Sales climbed 88 percent to $3.71 billion last year. According to researcher EMarketer Inc., revenue may increase 64 percent to $6.1 billion this year. That would be the third straight year of slowing growth,” according to yesterday’s Washington Post. “By contrast, Google’s sales more than tripled the year before its August 2004 IPO, filings show. Facebook’s IPO dwarfs that of Google, which raised $1.9 billion and valued the company at $23 billion.”
Be that as it may, the heavily ad-supported Facebook has committed to developing new products and strategic alliances (such as its profitable partnership with Zynga) to further diversify its income stream. Its IPO will be huge — whether it has legs for the rest of the marathon is the larger question.