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Let the Facebook IPO roadshow begin

Monday, May 07, 2012 - 01:56

May 7 - Facebook, the world's No. 1 social networking company, officially kicked off its campaign to drum up investor interest in what could be the biggest IPO ever for a technology company. Sasha Salama reports.

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Throngs of investors lined up in New York City about an hour before the roadshow officially began for the world's largest social networking company, Facebook. It's aiming to raise about $10.6 billion dollars which would make it the biggest tech company launch ever. Founder and CEO Mark Zuckerberg fielded questions about Facebook's slowing revenue growth and its $1 billion purchase of Instagram, which he said he would do again. Facebook has set an IPO price range of 28 to 35 dollars a-share, valuing the company at between 77 and 96-billion dollars. But the aggressive valuation is raising questions about whether Facebook can grow quickly enough to justify it. Max Wolff is senior analyst with GreenCrest Capital. SOUNDBITE: MAX WOLFF, SENIOR ANALYST, GREENCREST CAPITAL (ENGLISH) SAYING: "We do believe there is a law of large numbers and no matter how excited you are about Facebook, the law of large numbers holds and the bigger you are, the harder it is to grow." Display ads are one way Facebook makes money but some analysts say the company should pay more attention to higher margin businesses like Facebook credits. Users can buy these credits to purchase virtual goods within Facebook games or apps. SOUNDBITE: MAX WOLFF, SENIOR ANALYST, GREENCREST CAPITAL (ENGLISH) SAYING: "That's already 15% of revenue at Facebook and it's probably a little over 21% of profit based on our calculations. So it's overweight its profitability to its revenue. Clearly the margin on these things is quite appealing for Facebook. They need to grow that". Whether or not Facebook can pick up its pace of revenue growth, one thing seems clear. Many investors say they expect Facebook to raise the range of its offer price as the roadshow progresses from New York to other major U.S. cities over the next two weeks. Sasha Salama, Reuters.

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