It is IPO time in Techland once again. Facebook, the world’s biggest social networking service is finally going to file its IPO soon. This IPO has been discussed to no end since the rumors came out some 2-3 months ago. The facts are finally here. The company has planned to file a $5 billion initial public offering.
This happened yesterday when the company handed over the necessary paperwork to regulators. It has selected financial majors Morgan Stanley, Goldman Sachs, Bank of America Merrill Lynch, Barclays Capital and JP Morgan to manage the huge IPO. Morgan Stanley will be in a pivotal role in the management of this IPO.
Let us put that IPO sum in perspective. Google filed an IPO worth $1.4 billion in 2004. Groupon raised$750 million and got a valuation of $13 billion dollars which was half of the expected valuation. Zynga performed miserably in its IPO filing in this December but still managed to raise $1 billion and get a valuation of $7 billion which was way lesser than the expected $20 billion. Here, you see a trend where all these IPO’s are seemingly steep in expectations and that too when the economy is in a bad place. Investor trust in Tech companies is not very strong these days and this effects the valuation of most major Tech companies.
But will Facebook be different? It all depends. Considering the IPO history of the previously mentioned companies, Facebook might not reach $100 billion mark so easily. But then again, it just might consider how everyone seems to go gaga over it. The $5 billion amount is just a preliminary target and this will increase depending on investor demand in the coming months. Nonetheless, this marks the biggest ever US market debut in history and this is a company started by a college kid in his dorm-room. Let us see where this goes..
What are your thoughts on Facebook’s IPO? Do let us know.