The price of Facebook’s IPO is likely to be between $34 and $38. That is above the previous forecast level of $28 to $35. Of course, this means that demand for the share has risen sharply in the last few days. This is despite evidence that Facebook’s revenue growth has slowed and that it mobile sales are almost non-existent.
The lure of the offering remains Facebook’s 900 million users. Investors believe that there must be some way to turn that population into tens of billions of high margin revenue.
Facebook still may be able to pick the lock of display advertising, which it has not be able to sell at high prices. Whether it can win a race to smartphones against other social networks like Twitter and search companies like Google (NASDAQ: GOOG) is less likely. There are only so many angels that can sit on the head of the mobile device pin.
Douglas A. McIntyre