Is Facebook $100 Billion IPO a little overpriced? - latest tech tips

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Is Facebook $100 Billion IPO a little overpriced?

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Facebook is preparing for an Initial Public Offering of around $100 billion. Many people including me feel its way too overpriced. Now you must be wondering why I feel that way? Well there are many reasons for that.
A driving factor for any industry is the growth factor. As far as growth goes Facebook already had 500 million users. Recent trends suggest that Social media is already overcrowded and there is less scope for tremendous growth and now soon the consolidation phase would begin.

With consolidation I mean a period when growth either slows down or starts reducing. One example I can give is of the telecom industry in India. In very few years Indian cell phone industry saw a tremendous growth. From few millions to 800 plus million users.

The moment that happened the telecom industry in India saw a consolidation phase. Now due to MNP (Mobile number Portability) cell phone companies are trying to eat each others market. But their share values are at an all time low if not lowest.

Facebook is entering the market when the growth is already tremendous. But the problem with Facebook is its monopoly. There are many things in Facebook which even annoy users like recently introduced photo viewer, increasing privacy breaches and also potential privacy threats. But users are ignoring them due to lack of awareness or negigence. The day awareness would creep in people would start searching for alternatives.

In 2004 Google also had launched on IPO with $24 Billion one of the biggest at their time. But the difference between then and today is Facebook is already big and the hunger to grow is not that high which Google had at that time.

If Facebook IPO does get a good response initially and start seeing a downward trend it should not surprise people. I am not suggesting that growth is the only thing which is of great concern, the hunger for innovation and bring something new periodically should also be there. In case of Facebook I feel they are already at the peak and from the peak one can stay at the top or come back down.

Google success story is mainly because they give everything for free plus they give opportunity to earn money to millions of content publishers in many ways. With Facebook I feel its not such a simple case. May be in future Facebook will have to start thinking in those lines to stay in business.

May be this article is a bit ahead of time or completely irrelevant for many. I also like Facebook but I am a firm believer of Karma and Hindu mythology i.e. "Any thing that starts comes to an end". Facebook is cool today how long it stays cool only time will tell.


  1. AnonymousJune 18, 2011

    This blog post seems to be highly opinionated than research driven. Though the IPO might be overpriced , the reasons you gave are completely irrelevant.
    The belief that its already at the top is shallow!. They have created a new market and new space for themselves. They are innovating to build a great platform that works at scale!. When Amazon came into market they were an online book retailer are were doing fairly good. However innovation, good hiring and great platform led them to do many things which were not visible then. You might as well see Facebook coming in as Saas [photo sharing service] , PaaS, and many more things. I guess I made my point.

    More over the initial pricing is often based on sentiments, all the stocks consolidate eventually. FB is hottest in the tech market and have a product that really works !! ..that goes a long way. Not to mention that they haven't even concentrated on monetizing yet and they are already giving google and other online players run for their money. To say that something can never be improved and is at is peak reminds me of time when people thought getting better horses is the only way to make travel faster .. guess what there are cars and planes now !! . Oh btw there is no official announcement from FB yet .. the blog is hugely based on internet gossip and does not provide even one link or reference !! . Please do a little research before posting

  2. Hello,

    I knew many Facebook lovers would not like my post. I have even mentioned it at the end of the post. No matter what I really value your feedback. As far as research on this topic goes here is a list of links which suggests slow growth of Facebook. And its not jusy slow growth but the consistent pattern in which Facebook's users are shutting their accounts after a point of saturation.

    1. Facebook’s Monthly Active Users Decrease in U.S.
    2. Facebook loosing users
    3. Is Facebook growth stalling in North America?
    4. Facebook losing US, Canada users: Report

    I am not saying Facebook will be slowing tomorrow but in few years people will start involving themselves in very small relevant and personalized groups. There was a time when Orkut was a way of life in Brazil and not things have really changed.


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