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Facebook is rumored that they are anticipating a $100 billion dollar IPO in 2012. That opening amount figure is 61% of Google’s current market capitalization, 33% of Apple and 5 times the valuation Groupon hopes to go public (related article). Now, I know about as much about stocks and valuations to get me through both Wall Street movies in one sitting, but this rumor throws up some red flags. Facebook has rocketed into the stars in the last 6 years, but is it really worth that much?

First, you have to believe that Facebook is worth $100 billion dollars to even consider investing. I’ve spoken about the “social media bubble” in the past and how enormous valuations of companies like Twitter, Groupon and Facebook fly parallel to the Dot Com bust. The perceived value of these companies are inflated by the overwhelming amount of attention they receive from the public, not necessarily the hard numbers. So, let take a look at the hard numbers. Google valued at $162.5 billion dollars and annual revenues of $28.8 billion (2010). That feels right, a great company, internationally known, diverse product lines and a great revenue based market valuation. Facebook expected IPO of $100 billion dollars and revenues of $4.5 billion dollars (2010). Facebook has been around half as long as Google, is a great company and it is internationally known, but the revenue based valuation is a bit lacking considering it’s value compared to Google alone. Facebook especially pales comparison to Apple’s $300 billion dollar market cap. with revenues of $63.8 billion dollars. Chalking up the numbers is great information for the opening investors. What about you?

Can we consider buying 1 share of stock as rights to ownership of your Facebook profile? As users, we’re known to love Facebook; especially the avid daily users. One of the main reason these high valuations are appearing is, now more than ever, the public and end users have a huge influence on the perceived value of the company. The number of stakeholders in today’s tech IPO’s are much greater number than when Apple or Microsoft went public. Consider Facebook 600+ million users – all stakeholders – anyone in the media, app developers, and anyone who has had contact with someone who has a Facebook profile or been to a URL that was shared in Facebook which gained higher SEO ranking. It is probably not far fetched to say that anyone who has used the internet has been influence by Facebook, not to mention the people involved in the political uprising in Africa and the Middle East. We’re driving up it’s value despite it’s earning potential because we’ve all vested so much time, energy and information…

Information, this is where Facebook has the true potential. The one piece that could be considered the true asset and value add to the IPO if used correctly. As mentioned in a recent article if was describe how, Facebook, if it used its database correctly, could overrun Google in search. Search, one of the most powerful tools of the last 20 years has not been Facebook’s focus. However, we as users and stakeholders have submitted an overwhelming amount of information into Facebook. So much, that if a Governmental Conspiracy Theorists were to actually think about it, their heads would explode. Facebook has enough data to profile us all, recognize our buying habits, not just on past purchases, but on links shared, comments, pictures, and what we like. It can predict who we’ll meet in real life, who our next relationship would be with, even where we will go next for lunch. Facebook could… if Facebook wanted to. That data is what is incredibly valuable, but Facebook hasn’t used it for that yet. It hasn’t announced plans to, although I’m sure it in the back of their heads. But does that ability and that information become a $100 billion dollar value in an open market? Especially with the certainty of government regulations that comes with being a public company. If you thought the privacy policy were a headache in the past, you’re in for a whole new world when the SEC and other agencies get involved. Facebook is opening its door to potentially ruining it’s user experience.

Facebook is valuable, it has played an important role in the advancement of marketing, business, relationships and has been at the helm of social media. The big questions is whether Facebook’s $100 billion dollar IPO is legitimate or just novelty. Are we buying stock as a true investment in a company this will provide and grow revenues that justify it’s price. Is Facebook stock a true investment or is it like buying a star? – Fun because we own a part of something greater than ourselves.

What do you think? Would you buy Facebook stock?