Updated 05/17/2012 08:50 PM
Wall Street Already Looking Beyond Facebook IPO
The highly anticipated initial public offering of the social networking site Facebook has industry experts buzzing both at the hype and potential bumps in the road ahead. NY1's Annika Pergament filed the following report.
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Sen. Charles Schumer announced a plan Thursday to prevent Facebook co-founder Eduardo Saverin and any others who renounce U.S. citizenship for tax purposes from re-entering the country. Read NY1's story.
The excitement has been building for months. Now Facebook's meteoric rise is about to hit its peak as the company goes public and Wall Street is bracing for the big day.
"Google is the last time I remember this amount of buzz and it appears to me that this is exceeding even the Google buzz," said Ben Willis of Sunrise Securities.
Demand is so strong that it's pushed up the initial offering price of the stock, boosting Facebook's estimated value to upwards of $100 billion -- more than McDonalds or Citigroup. But until the trading session is underway Friday, only a select few can get in on the action.
"The vast majority of the participants of the IPO will be from the institutional side, or at least high net worth individuals," Willis said.
That's until the shares open for trading on the Nasdaq, the home of tech stocks where Facebook will be identified with the ticker FB.
Then small investors can get a piece of the pie, and Willis says the interest the stock is generating could be good for the market as a whole.
"Buying a stock like Facebook gives them that exposure, and I think that's positive for the broader trend that people will start to look at their portfolios and realize that they need to own more stocks," Willis said.
But for Facebook, it also means additional scrutiny and questions about whether the social networking site can hold on to the momentum.
"Unless they launch Facebook Moon or Facebook Jupiter, anytime soon they're pretty much stuck with a finite number of people using Facebook. That being said they need to come up with new ways to monetize the people they have online," said Angel Investor Peter Shankman.
Also under the microscope is CEO Mark Zuckerberg who will still retain more than 50 percent of voting rights. Investors will be closely watching how he steers the giant, so it doesn't go the way of one-time tech darlings like AOL or MySpace.
"He's also very, very smart and one of the things he did that's probably the smartest move he made, he's lined his bench with some of the smartest people in the industry," Shankman said.
And while the company's future may be impossible to predict, one thing seems certain.
"They're gonna break a lot of records on Friday. As an institutional investor I would invest in it, I would keep an eye on it," Shankman noted.