Is Facebook's Plan for 2012 IPO the Best Idea Ever?
Though it may be too soon to peg what Facebook's future as a public company might look like, one can't help but wonder whether or not the company’s decision to postpone the IPO until 2012 is now looking like a brilliant move.
The market has been infected with the “Sell in May and Go Away” bug and it might not be able to shake it anytime soon. A number of recent data points now suggest delaying the IPO until next year may have been the correct call.
Example A: LinkedIn (NYSE: LNKD). LinkedIn has the user base and model to make ad revs stream in, though people paying for enhanced service may be a little shaky. After exploding to above $122 on its first day of trading, LinkedIn unceremoniously has dropped 38 percent to hang around the mid-$70s to mid-$80s.
Example B: RenRen (NYSE: RENN). After peaking out at $23 on its first day, RenRen -- THE Facebook of China -- has plunked back down about 50 percent to close at $10.51 today. As a matter of fact, just today the stock closed 13.6 percent lower. With 31 million active users, the "everyone network" might be a good gauge of what's to come for Facebook.
Example C: Jiayuan.com (Nasdaq: DATE). Down 10.6 percent following its IPO in May.
Example D: General Motors (NYSE: GM). The renowned automaker is 18 percent lower since its re-IPO last November.
Example E: FriendFinder (NYSE: FFN). Like Facebook, but more 'adult' oriented, shares are down 42 percent since its debut.
Example F: The Nasdaq. After closing at 2,652.87 on December 31st, the market is up just 0.85 percent after a solid 5.5 months of trading.
With volatility abound and the U.S. economy still stagnant might 2012 be the magic year for Facebook's IPO? Current shareholders hope so.
Currently, SharesPost has Facebook shares trading for about $33 per, implying a market cap of about $77 billion. Not bad, but with about 600 million users, who knows if that could rapidly double, or even triple, as peer Google (Nasdaq: GOOG) boasts a market cap north of $160 billion.
We'll just have to wait and see.
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The market has been infected with the “Sell in May and Go Away” bug and it might not be able to shake it anytime soon. A number of recent data points now suggest delaying the IPO until next year may have been the correct call.
Example A: LinkedIn (NYSE: LNKD). LinkedIn has the user base and model to make ad revs stream in, though people paying for enhanced service may be a little shaky. After exploding to above $122 on its first day of trading, LinkedIn unceremoniously has dropped 38 percent to hang around the mid-$70s to mid-$80s.
Example B: RenRen (NYSE: RENN). After peaking out at $23 on its first day, RenRen -- THE Facebook of China -- has plunked back down about 50 percent to close at $10.51 today. As a matter of fact, just today the stock closed 13.6 percent lower. With 31 million active users, the "everyone network" might be a good gauge of what's to come for Facebook.
Example C: Jiayuan.com (Nasdaq: DATE). Down 10.6 percent following its IPO in May.
Example D: General Motors (NYSE: GM). The renowned automaker is 18 percent lower since its re-IPO last November.
Example E: FriendFinder (NYSE: FFN). Like Facebook, but more 'adult' oriented, shares are down 42 percent since its debut.
Example F: The Nasdaq. After closing at 2,652.87 on December 31st, the market is up just 0.85 percent after a solid 5.5 months of trading.
With volatility abound and the U.S. economy still stagnant might 2012 be the magic year for Facebook's IPO? Current shareholders hope so.
Currently, SharesPost has Facebook shares trading for about $33 per, implying a market cap of about $77 billion. Not bad, but with about 600 million users, who knows if that could rapidly double, or even triple, as peer Google (Nasdaq: GOOG) boasts a market cap north of $160 billion.
We'll just have to wait and see.
Get immediate access to market moving news and alerts with StreetInsider.com Premium - FREE TRIAL!
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