At Forbes, Peter Cohan isn't exactly thrilled by Facebook's impending IPO. Which, it should be added, is no longer being talked about aa a $100 billion public offering so much as a $75-$100 billion public offering, with the emphasis on that lower number. Anyway, here's Cohan:
It is popular in the media to compare the Facebook IPO to that of Google whose price has risen nicely since its 2004 IPO from $84 to $580. That 30% compound annual growth is good – but Google trades 19% below its 2007 peak of $715.
To be fair, there is a bit of good news for those hoping that Facebook stock will climb after it goes public. A quick look at Google’s 2004 prospectus reveals that its IPO price of $84 valued Google at a P/E of 80 – the same as Facebook’s estimated P/E (Google had 271 million shares and estimated 2004 net income of $286 million at the time of its August 2004 IPO).
That’s the only glimmer of good news for why Facebook’s IPO might breathe some life into the business of VCs and tech entrepreneurs. But Facebook’s inability to transform the way companies operate their business means that it will remain a niche phenomenon in the grander economic scheme.
Cohan makes a point that tech folks, entrepreneurs, and venture capitalist are beginning to make a lot: that all these new social media technologies are cool, but until they move into the enterprise space — becoming relevant for business — they'll remain distractions. Plus, the social-media realm is getting crowded.
Facebook obviously already has the pole position. But a big question, as it roars toward its IPO later this year, is, "Where's the growth going to come from?" Doesn't everyone who's going to get a Facebook account already have one?
Facebook's IPO will be big, there's no mistaking that. But whether the company will remain big is another matter altogether.