Social network Facebook aspires to become a heavyweight on the NASDAQ technology stock exchange. Investors eagerly await what's billed as a historic IPO, but the company's perspectives are unclear.
Expectations couldn't have been any higher for the initial public offering of Facebook. Called into being only eight years ago, Facebook is now counted among the 10 best-known brands worldwide.
Strong demand for a piece of the company led Facebook to announce on Wednesday that it would offer 25 percent more shares at a price of between $34 to $38 each at its IPO.
"Facebook can achieve everything," Wall Street trader Louis Sulsenti said. "Investors are aware of the gigantic user numbers and its growth potential."
Sulsenti said he is convinced Facebook will be among the biggest IPOs ever in the technology sector. Google currently tops that list by raising little under $1.7 billion back in 2004.
But Facebook's IPO is dividing minds in financial circles. The social network currently has over 900 million users, roughly three times the number of people in the United States. And it means 900 million sets of specific user-related data about interests, preferences and lifestyle issues. Last year alone, Facebook managed to pocket more than $3 billion through advertising.
Mobile use a crucial point
Analysts have said the future of the Internet business lies in mobile devices platforms for which Facebook allegedly has no strategic business plan. In March users accessed the social network on their mobile phones for an average of 100 minutes longer than on their desktop PCs or laptops.
"The higher use on mobile devices has seen profits generated on the website go down, because ads are only found there," said Scott Kessler, an IT analyst with Standard & Poor's, adding that Facebook needs a plan for squeezing money out of mobile device users, too.
Despite high user volumes, their activity has been declining in a phenomenon called "sharing fatigue." In the run-up to the network's IPO, almost every expert in the field seems to have an idea for Facebook's long-term success. Some said it has to become more flexible and operate as a multimedia company, integrate videos and films or incorporate telecommunications elements.
"To let users pay for access to certain services is probably not what Facebook managers want," said Kessler, adding that he believes Zuckerberg and his team will focus on more advertising and online games for fees.
Chinese market closed
Investors are also worried that Facebook cannot grow in the long term without full access to the Chinese market, where censors currently prohibit access to the social network. With 500 million online users China is the biggest playing field for Internet companies.
"Hundreds of Chinese firms would be likely to strike partnership deals with Facebook," Kessler said.
The boss calls the shots
In his 30-minute promotion video made for his roadshow, Facebook CEO Mark Zuckerberg dedicates only four minutes to future developments. He said the company wants to become a hub for mobile apps and "social software." The sometimes stubborn company chief is seen as a pivotal factor. He will hold a 57-percent majority share and wield more power than anyone else at the helm of a listed firm.
Facebook managers have had a record of focusing more on securing loyal users rather than on short-term financial success. A graphic example of that philosophy has been Zuckerberg's decision to spend $1 billion on the acquisition of mobile photo app maker Instagram - a move which has seen many finance experts shaking their heads in disbelief.
"He's the one who controls Facebook, and he appears to be someone who isn't too keen on consulting with others about his decisions," Kessler siad. "It may well be that he'll be implementing things that shareholders don't like at all."
Author: Miriam Braun / hg
Editor: Sean Sinico