Given the media blitz on Facebook's plans for an IPO, by now it seems we've learned everything about the company except what CEO Mark Zuckerberg eats for breakfast.

Maybe one of the TV tabloid shows will fill us in on that soon.

Meanwhile, what I really want to know are the answers to the following key questions: Will the company be overvalued? Does Facebook have a future, or will the IPO mark its top? How much will shares cost me? What are the real risks?

And based on all that, should I buy the darn stock?

I recently talked with a half dozen or so tech and media experts, including a few who already own the stock via the private market, and I came away with the following key takeaways. Call it a field guide to the Facebook IPO.

Takeaway No. 1: Shares will be 'overvalued,' but so what?

According to numbers leaked to the media by Facebook IPO insiders, the social-media site will come public with a market cap of $75 billion to $100 billion. Given the trailing annual revenue of $3.7 billion and trailing earnings of $1 billion, the company will have a price-to-earnings ratio of 75 to 100, and a price-to-sales ratio of 20 to 27.

Those seem like crazy numbers, compared with price-to-earnings and price-to-sales ratios of 20 and 5 for Google (GOOG, news)and 13 and 3.3 for Apple (AAPL, news). But they really aren't too high if you, like many investment pros, believe this is a game-changing company in the early stages of its growth.

"It doesn't sound too ridiculous," says Michael Scanlon, a tech analyst with the John Hancock Balanced A (SVBAX) fund. He points out that Google carried what seemed like a crazy price-to-sales ratio of 23 when it came public, and the stock has done incredibly well since.

image: Michael Brush

Michael Brush

"Facebook is still in its infancy. Social-media spending is a fairly new initiative for Fortune 500 companies, so it will take a while for them to figure it out," he says. Advertisers had the same attitude toward the Internet a decade ago. But online ad spending is set to surpass offline ad spending for the first time this year.

"This kind of offering is a battle between people who argue it is insanely expensive and people who look at the huge footprint the company has and how they have only scratched the surface of monetizing that," agrees Kevin Landis, portfolio manager of Firsthand Technology Value (SVVC) fund, which has more than 5% of its assets in Facebook, the fund's largest position. "It is almost not worth arguing what the right multiple is. If they fully take advantage of their possibilities, they could be worth more than Google."

Hmmm. Valuation doesn't matter? Didn't we hear that during the tech bubble about a lot of companies that didn't survive?

Yes. But some of the companies from that era were game-changers worth paying a little extra for -- think Amazon.com (AMZN, news) and Google. Which brings me to the next key takeaway:

Takeaway No. 2: Facebook is a real game-changer

In the run-up to Facebook, a string of social-networking stocks went public last year. And investors who bought their IPOs have generally lost money. (Read "The year of the broken IPO.") So why pay a bundle for this one?

Because Facebook is "just another social-networking stock" the way Google was "just another search engine." It's the company that defines how to make money in the sector.

"Facebook, to me, looks dominant," says veteran investor Tom Vandeventer, portfolio manager of the Tocqueville Opportunity (TOPPX)fund, which has about 2% of its portfolio in Facebook. "This company has one of the most compelling business models that I've seen in 30 years. It has the ability to really take a lot of market share in advertising."

As evidence, Vandeventer cites some of the stats that Facebook released in its IPO filings. A key one: Facebook numbers on what it calls "engagement." Users post 2.7 billion "likes" and comments a day, or five or six comments per user, per day, for the most-active user base of about 500 million. (Total membership is 845 million.)

"It is not a pass-through site. That makes Facebook very competitive. That is what people underestimate here," says Vandeventer. This helps give Facebook the all-important defensive moat that investors look for. "I don't see the entrenched Facebook user base going anywhere. They're not going to leave their friends and friend circles."

While you're on Facebook, of course, it is gathering tons of intensely personal information about you, which it can then use to target ads -- something that no other site can do as well. "When Google tries to take advantage of this, it feels kind of creepy," says Landis. "When Facebook does it, it's much harder to complain because you gave it up. You posted all that stuff."

Facebook is still learning how to make money off of all it knows about you. And it will probably be learning for years, just as Google has evolved over time. But here's a simple example that drives home the potential, says Landis.

Say you're a wedding photographer. When you give Facebook your ZIP code and some money, it can show your ad to all the people near you who have indicated on Facebook that they just got engaged. Powerful stuff, which Landis says can help businesses overcome their age-old gripe about marketing dollars -- that half of their ad budget is wasted but they don't know which half.

Three key surprises in the filings confirm all of this:

● Facebook has operating margins of 50%, compared with Google's 24% when it came public, says Vandeventer. This profitability gauge measures earnings before costs like interest and taxes. "We're looking at a very profitable business," he says.

● Facebook earns net margins -- the bottom-line profit margin -- of 27%. That's the $1 billion in earnings from $3.7 billion in revenue. "You just don't see that very often," says Tom Taulli, an IPO expert who writes for InvestorPlace. "It's definitely a monopoly platform like Google. And these types of monopolies have off-the-charts profits and high barriers to entry."

● Average revenue per ad jumped 24% in the fourth quarter, compared with the year before. "That is really good pricing power, really out of the ballpark," says Vandeventer. Pricing power is a key sign of strength in a company, and a quality that ace investor Warren Buffett always looks for.

Those are numbers the other recent social-media IPOs simply can't come close to.

Takeaway No. 3: Shares should debut at $35 to $40

Vandeventer estimates that there are 2.6 billion Facebook shares outstanding. Given the leaked estimates that its IPO will net a market cap of $100 billion or somewhat less, this suggests that Facebook will debut with shares in the $35 to $40 range.

This estimate makes sense for a number of other reasons, too. First, Facebook shares currently trade for about $30 to $33 in the private markets where the stocks has been available for some time. And if you put the same multiples on Facebook that Google carried not long after its IPO, you get to the same ballpark of $35 to $40.

Of course, Facebook likely won't have its IPO until May or later, and the company will release first-quarter results before then. If those results show really impressive growth, that $35-to-$40 range could rise, says Vandeventer.

That price, of course, is available only to privileged investors with large enough brokerage accounts at the right brokerages, like Goldman Sachs Group (GS, news) or Morgan Stanley (MS, news), to get early access to shares. In the first day of trading, Facebook stock could zoom higher, as social media IPOs like LinkedIn (LNKD, news) did last year.

This why most investors need to be careful not to overpay on that first day or on any early spike. Hot IPOs can have wild volatility in the early days because of all the enthusiasm.

If the price soars, wait. Facebook will likely have a lockup release 90 days or 180 days from the IPO, which will allow insiders to sell huge amounts of stock. This could create a dip, and a better chance for most investors to get in.

Takeaway No. 4: Facebook faces real risks

The opportunity to invest in even the clear leader in an evolving space like social media comes with a lot of risk.

Theoretically, Facebook could end up as the next MySpace or Friendster, its social-network predecessors. In reality, the company is so good at what it does that it's unlikely it will get pushed aside so easily. Its vast membership proves this.

Instead, one risk that really bothers me is simply that a big part of Facebook's business is display advertising. By most accounts, that's not a great business.

A key advantage is that Facebook knows so much about its users. But any kind of specialized site can make a similar claim. A website dedicated to weddings, for example, knows its users are interested in themes like starting a new household, children and, of course, wedding planning.

A good comeback is that Facebook has a wider range of much more targeted personal information to sell against. "Facebook ads have a decent return on investment to smaller clients," says Kenneth Wisnefski, the CEO of WebiMax, a social media marketing firm in New Jersey. "We worked with a company that sold vintage Bruce Springsteen memorabilia. They did great on Facebook, because they were able to reach the group they wanted to reach."

But Wisnefski wonders if Facebook will be able to perform the same magic for larger companies that sell products that aren't nearly as niche -- but which have much bigger ad budgets.

He's not alone. "I have contacts who advise on how to spend advertising dollars at Facebook, and they are still trying to figure out what the return is," agrees David Rudow, a tech sector analyst for Thrivent Asset Management. "Just because your friend bought a Whirlpool washer doesn't mean you're going to buy one, too."

One solution may be to make money off a payments system, the way eBay (EBAY, news) does with PayPal. This is in the air with Facebook, given that PayPal co-founder Peter Thiel is a big Facebook investor. But here, Facebook might suffer from the Best Buy (BBY, news)effect, which has people using the retailer as a showroom before going off to make purchases elsewhere, presumably online. "Facebook wants you do everything on the Facebook platform, search and buy, but what is to stop people from going outside the platform?" asks Rudow.

Another fix for Facebook would be to get more aggressive in using what it knows about you to serve up ads more forcefully. "But the risk is that they know too much. So if they push too hard on marketing, will people get creeped out?" asks Rudow. "They need to be able to do it in a way that doesn't upset the masses," agrees Wisnefski.

Yes another risk is the huge migration of online browsing to smartphones. It's a lot harder for Facebook to serve up ads on the small screen. It knows this and admits it does not have a fix yet. One solution might be to make people watch ads before they can proceed to their Facebook pages, a trick used by sites offering online video. But will Facebook users tolerate this?

And don't forget that Facebook competitor Google controls a big piece of the smartphone arena via its Android operating system, says Taulli. The search giant wants to be a bigger player in social media. Android looks like a pretty big potential weapon in the battle with Facebook over the use of social media on smartphones. "The Achilles heel for Facebook is mobile," says Taulli.

So far, Facebook has been great at facing challenges; it can probably figure out a way to overcome these risks, too. But the jury is still out.

Takeaway No. 5: Mark Zuckerberg is in the driver's seat

Facebook CEO Zuckerberg's portrait in the movies was not too flattering. And Facebook IPO filings suggest he's a control freak. He's lined up 57% of voting rights at the company through his stock holdings and alliances. This gives him total control over the company and its board, members of which would normally be picked by shareholders to represent them and help assure management does not do dumb things.

"It's just not shareholder-friendly," says Rudow. "It's not a good thing, because shareholders have absolutely no say."

Zuckerberg also has control over who runs the company after he dies, via prearranged instructions. This is pretty unusual.

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Zuckerberg owns a big stake in the company, so his interests are aligned with shareholders. But these slights toward shareholders have some investors wondering whether Zuckerberg, who has been ambivalent about his company going public, will be available to explain the game plan when problems crop up.

If he doesn't interact with investors often enough in person, they can always try messaging him on Facebook.

At the time of publication, Michael Brush did not own or control shares of any fund or company mentioned in this column.

Michael Brush is the editor of Brush Up on Stocks, an investment newsletter. Click here to find Brush's most recent articles and blog posts.

Stocks and funds mentioned on previous pages include Google (GOOG, news), Apple (AAPL, news), John Hancock Balanced A (SVBAX), Goldman Sachs Group (GS, news) and Morgan Stanley (MS, news).