Diary of an IPO: S-1 Craziness

Posted by on May 11th, 2012

I just read that Facebook may raise the price range of its IPO and, if it does, will be filing yet another S-1 in the coming days.  I have been blogging about the baselessness of the proposed valuation of Facebook since prior to the roadshow commencing. To sum up almost 10 blogs (http://bit.ly/DiaryofanIPO) — I believe this might just be one of the most egregious investor abuses and/or insanity in the past several decades.

Why? Facebook, in its initial S-1, amended S-1 and amended, amended S-1 filed this week in no way justifies its nearly $100 billion valuation. And, now it’s being reported that it might increase its valuation by 20% and, as a result, will have to file yet another S-1???

The craziness is that nothing in the S-1 has changed in regards to the company’s business or growth plan/strategies.  Indeed, one of the significant changes in the most recent S-1 is that its mobile strategy is problematic and that the company may struggle to monetize any such mobile strategy and achieve profitability.

Bottom line, a near $100 billion valuation based on this is a far reach – a near $120 billion valuation is absurd.  Investors beware.  Stay tuned . . .