Facebook: Targeting $85 to $95 Billion IPO Valuation Rather Than $100 Billion? (FB, GOOG, ZNGA, MSFT, GSVC, SVVC)

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If you are like me, chances are high that you are ready for this Facebook IPO to finally get out of the way.  Make no mistake, Facebook will be the most highly watched and anticipated IPO of the last decade.  The good news is that the roadshow is imminent and that puts about two weeks or so before the likely share sale.  We keep getting this $100 billion valuation from investors and the media, but it appears that the valuation may be a tad less if the IPO filing chatter is any real indication.

The WSJ has reported that a new S-1 filing is expected after the close of trading this Thursday.  Today’s aim is an expected price range in the high-$20s to the mid-$30s per share in the IPO for a valuation of roughly $85 billion to $95 billion.  Another issue is the date of May 18 as the initial public offering date, but we would warn that pegging an exact date with two weeks or so to go for an IPO is probably more alchemy than science even if this is Facebook and even if the date turns out to be the right date.

Our concern is the sequential revenue issue.  Facebook is supposedly one of the thorns in the Google Inc. (NASDAQ: GOOG) advertising model because it is so targeted to users.  If so, then it should be growing endlessly every single quarter.

Zynga, Inc. (NASDAQ: ZNGA) is viewed as the secondary beneficiary of the Facebook move, but its shares are down since earnings and the stock is technically trading as a busted IPO.

Microsoft Corporation (NASDAQ: MSFT) will have a large gain in its holdings of Facebook shares but that company is far too large to view as a true direct beneficiary based solely upon the valuation bump-up from the Facebook value.

GSV Capital Corporation (NASDAQ: GSVC) is down today but shares are up well over 30% from the start of the year due to the BDC’s direct ownership of Facebook shares that it has bought through private-public exchanges.

Another ‘Facebook Winner’ is the lesser-known Firsthand Technology Value Fund, Inc. (NASDAQ: SVVC) with its Facebook shares: as of March 2, 2012 the fund’s investment in Facebook consisted of 200,000 shares of Class B common stock.

Whatever the valuation comes out to be, let’s all just hope that Facebook comes public and gets this endless hype over with.

JON C. OGG

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