Facebook is gearing up to befriend investors. That, at least, is the chatter around Silicon Valley after the social networking darling booted its chief financial officer. But an IPO would be risky given Facebook’s business model is still unproven – unless it has a gun to its head.

Source: WSJ

Date: 4/02/2009

Keys: finance, management, investment, stock market, marketing

Link: http://money.cnn.com/2009/04/02/technology/facebook_ipo.breakingviews/index.htm?postversion=2009040214

Questions for discussion:

• What reasons might explain Facebook’s current owners’ motivation to become a public company?
• What similarities are there between Facebook today and Google just before it went public?
• How can you explain the valuation stated for Facebook ownership, given its current financial condition?
• Do you think Facebook would be as good a stock performer as Google has been since it went public?
• Explain your thinking in terms of profits, market share, advertising revenues etc.