As Facebook’s IPO nears, half of Americans say shares are overpriced

May 15, 2012

In a new Associated Press-CNBC poll, 50 percent of the respondents said that the asking price for Facebook’s shares “is too high,” the Associated Press reports.

The company Mark Zuckerberg created as a Harvard student eight years ago is preparing for what looks to be the biggest Internet IPO ever. Expected later this week, Facebook’s Wall Street debut could value the company at $100 billion, making it worth more than Disney, Ford and Kraft Foods.

That’s testament to the impressive numbers Facebook has posted in its relatively brief history. More than 40 percent of American adults log in to the site —to share news, personal observations, photos and more— at least once a week. In all, some 900 million people around the world are users. Facebook’s revenue grew from $777 million in 2009 to $3.7 billion last year. And in the first quarter of 2012 it was more than $1 billion.

Just a third of those surveyed think the company’s expected value is appropriate, while 50 percent say it is too high. Those who invest in the stock market are more likely to see shares as overvalued, 58 percent said so. About 3 in 10 investors say the expected value of shares is fair. Facebook on Tuesday lifted the expected price for its shares to $34 to $38 apiece from $28 to $35 each.

Trust issues are starting to bubble up, as the IPO approaches The Post’s Hayley Tsukayama reports :

Once Facebook goes public, it will have to focus even more closely on advertising, which means that the network will be in search of new ways to advertise. Users will most likely see more of the attempts at brand engagement and more use of Facebook Credits as the company builds out its development platform to be more attractive to advertisers. And that will probably make the average user uneasy, exacerbating users’ wariness about the network.

The company has been telling users more about how it uses their personal data in the wake of a settlement with the Federal Trade Commission, and has raised its public image in small ways such as holding a live privacy chat with its head privacy officer or using its social reach to promote organ donation.

Yet while 71 percent of those polled in the AP-CNBC poll said they have a favorable view of the company, 59 percent of those polled said they don’t think the social network will keep their personal information private. Privacy issues are keeping away potential users as well: 21 percent of those who don’t use Facebook cited privacy as their primary concern.

To grow its business, Facebook will have to convince those users that it’s safe to share their personal, financial and social information with the company. That’s a tall order, and it will be interesting to see how the company balances the demands of its investors and advertisers with what the company proudly says has been its mission all along: user experience.

For those wondering how to get in on the social network’s stock offering, there are some things you need to know, the Associated Press reports:

Hoping to get in on Facebook’s hotly anticipated public stock offering? You’ll need Facebook friends at very high levels — or a lot of money.

Most people who like the idea of owning Facebook’s stock will have difficulty getting it at the offer price, currently expected at $28 to $35 a share. Unless you know the right people at Facebook, you’ll likely need to have a large, active account with one of the big banks or brokerage firms directly involved in the stock sale.

Otherwise, you can take your chances by buying shares after the initial public offering is completed, when Facebook begins trading on the Nasdaq Stock Market under the ticker symbol “FB.” That’s likely to happen Friday.

Doing it that way typically means paying much more for the stock, however. And heavy demand skews the early stock price, leaving an investor vulnerable to the risk of a big drop.

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