With Facebook set to debut Friday, investors have to weigh whether the social networking company’s initial public offering will be as big as some think or another tech bust.
If the Facebook IPO is to succeed, it will have to overcome a less-than-stellar history of similar technology offerings that started quickly out of the gate but faltered shortly thereafter.
The offering is expected to raise more than $15 billion, making it the eighth-largest global IPO ever and give the company a market value of $77 billion, the most ever for a U.S. company at the time of its IPO, according to Dealogic.
But by now names like Zynga [ZNGA 8.3401 0.1201 (+1.46%) ], Groupon[GRPN 12.43 -0.62 (-4.75%) ] and even Pandora [P 10.329 -1.041 (-9.16%) ]are familiar as companies that were supposed to be the next big thing but showed little staying power once the initial euphoria wore off.
Indeed, the challenge for the ubiquitous social networking Web site is to be a game-changer.
“Everybody is thinking about the year 2000: Are these real companies, or is this the tech bubble all over again?” says Nadav Baum, executive vice president at BPU Investment Management in Pittsburgh, Pa. “”Everybody’s on Facebook. But how are they going to make money?”