Facebook IPO Received Cautiously

As Facebook prepares for its Initial Public Offering (IPO), which will occur at an undisclosed time this spring, many investors want to know what value of a singular website is—especially one whose whole purpose is devoted to conveniently providing its members with fun and easy access to social communication via the Internet.

If the projections within the media prove accurate, then the answer is approximately quite a lot: $75 to $100 billion according to the Wall Street Journal on Feb. 2.

Facebook, Inc., which has until now been largely financed by private investors, hopes to raise between $2 and $10 billion with its IPO, making it the largest Internet IPO in history. Facebook's CEO and founder Mark Zuckerburg had long been opposed to converting the company from a private venture into a publicly traded  identity. It was not until Facebook was projected to have more than 500 private stockholders by the end of 2011 that Zuckerburg decided it would be best to take the company public. According to a regulation by the Securities and Exchange Commission, any private company whose private stockholders number is greater than 500 is required to disclose some of its financial statements to the public.

Facebook, with its soon-to-be ticker symbol FB, has many reasons to send investors' hopes aflutter. Boasting a net income of an even billion dollars, net cash flows from operations of $1.549 billion, and the ability to advertise to over 850 million users all bode well for Facebook's IPO. Despite the jaw-dropping projections in the tens of billions, there are some who are not completely sold on Facebook.

Many older investors remember the horror when the dot-com bubble of the late `90s and early 2000s burst, causing many of those businesses to go under and causing severe losses for anyone too heavily invested in the market. Tech companies such as Facebook are generally associated with rapid growth, fierce competition, and higher than average risk.

For many investors, Facebook's predicted potential appears too good to be true. Not long ago in 2004, a similarly infamous Internet tech company, Google, Inc., released its IPO to a valuation tune of $23 billion. There are investors who feel that this is their second chance to catch the boat if they missed out on Google's swift success. But there are also a multitude of questions that Facebook's financial statements can only hint at answering.

Will Facebook be able to increase its revenues while slowing down its rapidly growing expenses? Could Facebook adjust quickly enough without Zynga, which comprised 12 percent of Facebook's revenues in 2011? Whatever doubts there may be for its long-term success, Facebook promises to have an exciting entrance to the publicly traded market.