Facebook IPO might be worth waiting for - KMSP-TV

Source: MarketWatch

MENLO PARK, Calif. -- Most investors realize that unless they work for a big mutual fund or institution, they will not likely be able to buy shares of Facebook when it makes its debut late next week.

Facebook's upcoming initial public offering (IPO), which is expected to value the company at around $95 billion, is the biggest internet IPO since Google went public in 2004. There will even be shares allotted to retail investors, with perhaps 20 percent to 25 percent of the offering going to retail or online brokerage firms catering to average investors and day traders.

The question for most investors will be whether they should buy Facebook shares after the first-day pop. The big money will have been made by top executives, such as founder and Chief Executive Mark Zuckerberg, its venture capitalists and other bigwig investors.

Joe Day Trader and his brethren will have to look at the stock -- after it prices and begins actual trading -- and decide for themselves.

The anticipated frenzy over one of the largest tech IPOs ever probably is going to be contagious.

Leading up to the roadshow, which started Monday, some of the biggest speculation was about whether Zuckerberg would show up, and if he would wear a suit instead of his much remarked-upon hoodie. He did show up, at least in New York, but he did not wear a suit.

Still, it is going to be easy for investors to get swept up in the hype. After all, nearly one billion people are registered monthly users of the social network. Most people know what Facebook is or they use it.

But average investors might do well to avoid the first-day madness and instead wait and watch how the stock trades and whether it looks like it is going to be able to maintain its hefty valuation. Even the Oracle of Omaha, Warren Buffett, said he will not be investing in Facebook. But it is worth noting that he is also incredibly averse to investing in IPOs.

On the bullish side, though, one Wall Street analyst, Arvind Bhatia at Sterne Agee, started covering Facebook on Monday with a buy rating and a price target of $45.

"Just like Google did less than a decade ago, we believe Facebook is disrupting the worldwide advertising market," Bhatia wrote in his report.

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