Facebook Prepares to File for IPO, May Raise $10 Billion

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Facebook is preparing to file an IPO as early as this Wednesday and financial analysts expect the company to raise $10 billion. Investors could value the company between $75 billion to $100 billion.

If the actual figures are close to the market expectations, then that would result in the company having one of the biggest all time IPOs and the company would be one of the largest firms in America and the world. It would rank alongside long-established companies such as McDonald’s and Bank of America. Facebook’s IPO would also rank as the biggest one by an Internet-based company, beating rival Google’s IPO in August 2004.

The reasons investors are salivating over Facebook’s IPO are easy to see. Facebook has 800 million users and the number is growing. The social-networking site earns most of its revenue from selling advertisements. It is estimated that the firm will capture 20% of the display ad market by 2011; right now it is around 16%. It is also expected to capture 8% of the total online ad revenue this year. Facebook’s total revenue is expected to be $5.78 billion in 2011 and grow to $7 billion by 2013.

  

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But there are skeptics that say that the company is over-rated and such a high value for the company and its IPO signals a second tech bubble, similar to the one that exploded in 2001-2002. They also say that a comparison to Netscape’s offering in 1995 is flawed.

Netscape’s offering is widely believed to have changed the Internet landscape and helped to usher in the Internet age, which gave a huge boost to related tech companies. Facebook on the other hand is unlikely to impact the tech field and the entire economy on a similar scale for the foreseeable future.