Facebook IPO price likely to surge despite concerns

Facebook is gearing up for its much discussed initial public offering at US$28 to $35 a share, targeting a valuation of as much as $96 billion, the Wall Street Journal reported last week.

The social media giant’s share price is likely to surge on the day of its IPO, many experts believe, Financial Times reported. The price would likely be driven up due to a relatively small number of shares being put on sale, combined with Facebook's popularity.

However, one tough job the site faces is convincing investors that it will continue to grow, one IPO adviser explained to the FT. Another concern is Facebooks’s ad business, which accounted for 85 percent of its total revenue last year. “It has been tricky as the social network has struggled to balance the needs of advertisers, who want more room for display ads on the site, while trying to maintain the quality of the experience for users, who dislike ads,” the WSJ analysed.

Another concern is Facebook’s limited ways to make money off its mobile app, despite more than half of its 900 million users accessing the site through the app, the WSJ pointed out.

Responding to that, Facebook is using acquisitions to fuel growth in services aimed at mobile users, Bloomberg reported. Last month the company bought Instagram, a mobile photo-sharing service for $1 billion, and its latest move is acquiring Glancee, a mobile service helping users find and connect with people based on their locations.

Facebook’s IPO is likely to be the largest ever for an Internet company, dwarfing the $23 billion debut of Google in 2004, according to the Guardian.


The social network announced it had 500 million users in July 2010. Today, with 901 million monthly active users, the company is on track to hit the billion mark by the end of the year, the Guardian added.

The site has even become a major force in this year's U.S. presidential election, as both the Obama re-election campaign and the Mitt Romney campaign put Facebook at the centre of their strategic plans, the Guardian pointed out.

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