Your 3,000 “friends” will not care if you buy at the wrong price and it does not matter whether you liked the movie. Ahead of this month’s planned initial public offering, investors need to start thinking about Facebook the stock – not Facebook the cultural phenomenon. What sort of company is it, and how to value it rationally?
The IPO is expected to raise $10bn or more, making it the biggest tech offering ever, but its significance is greater than that. Its success or failure will be interpreted as a judgment on a generation of companies that aims to wring profits from online social life, and as a measure of an uncertain market’s risk appetite. The feverish atmosphere surrounding the debut makes it all the more vital to take a step back and assess Facebook as just another business.
Being Microsoft and Google