Facebook's perfect IPO timing

Experts say now is the ideal time for the social media giant to go public.

By TheStreet Staff Jan 27, 2012 4:57PM

the streetUpdated Monday, Jan. 30

By Olivia Oran


Facebook is edging closer to its eagerly anticipated IPO, according to The Wall Street Journal, which says the social networking phenomenon may file its IPO documents on Wednesday. Experts say now is the perfect time for Facebook to start out on its IPO path.


"We expected them to file in the third to fourth week of January because they closed their prior quarter Dec. 31," said Sam Hamadeh, the CEO of research firm PrivCo. "Now they get a full 120 days runway to take off with the IPO without showing any other quarterly numbers and filing any amendments."


"All the stars are aligned," he added. "We predict that it'll trade before May 15, probably in late April or early May."


Citing an unnamed source, the Journal reports that Facebook may be looking at a valuation of $75 billion to $100 billion. Morgan Stanley (MS), it added, mat be close to winning the deal to become Facebook's lead underwriter, although Goldman Sachs (GS) may also play a major role.


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Scott Sweet, a senior managing partner at IPO Boutique, predicts that Facebook will easily be the hottest IPO of 2012 and says that now is a great time for CEO Mark Zuckerberg to take the company public. "It's just time for them," Sweet said. "They have brought in the best of management, (and) they are further monetizing their product."


Facebook's sales were estimated to be more than $4 billion last year.


Max Wolff, an analyst with GreenCrest Capital, estimates that Facebook's IPO could generate up to $150 million in banker fees.


"Facebook is obviously the IPO of the year, maybe the IPO of the decade, likely the largest IPO in dollar value in American history," he said. "The market is a pretty dim environment right now, but you have a very bright light coming in."


A Facebook IPO, however, would not necessarily encourage other tech companies to go public, according to Tom Fox, the head of global capital markets at UBS (UBS). "Facebook is so unique," he said in an IPO briefing with reporters last week. "It's so distinct, and it's so different that it won't provide a meaningful impact on other companies."


"Last year, there were always some major risks to Internet companies that came public," noted Ryan Jacob, the chief investment officer of Jacob Internet Fund. "They were lackluster and disappointing. In this case, for Facebook the only major risk is execution. When that's you're biggest risk, it points to an enviable position."


Facebook has not yet responded to TheStreet's request for comment on this story.

Jan 28, 2012 2:53PM
Buy facebook shares or more guns and ammo? I will buy the latter, thank you.
Jan 28, 2012 5:30PM
Do any of you fools know whats going to happen on its first day of trading?  Just think of Groupons first day.  Its gonna skyrocket.  Maybe it has no long term stability but really we all know whats going to happen the first day.
Jan 28, 2012 12:25PM
Jan 28, 2012 9:43AM
Investing money in Facebook is for Fools! They are a Fad and have not shown any Model of Long Term Profit! ! But go ahead - it's your money - for now!
Jan 30, 2012 12:23PM
I've never bought stocks before, and in this case I'm contemplating buying 500 shares right off the bat and holding until eternity.
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