Wall Street will force Facebook to go public by stirring up the rumor mill and forcing Facebook to step up plans. Investment bankers are looking for it to go IPO. The problem is unless Facebook has a revenue plan better than the one it has now, any IPO will be a short lived success. If you ask any investment banker about the Groupon IPO they will tell you it was a success; because they made their money and ran for the hills.
A company launching an IPO does not mean the company has legs; meaning its a business with a sustainable business model. What do I call a sustainable business model? Any model that allows a company to operate profitably for 3 years. I prefer 5 years. By the way I am not talking about a green business but a business where the model has been able to return investors at least a 1 multiple of their money in 3 years, cash flow is neutral or positive for just as long, and expenses are not continually rising. Yes, this is not a high ROI model. I have seen enough of those scams to know that a conservative approach is best.
Since Groupon has launched it operating costs has risen and its stock price has tanked. The only people who made money on Groupon are the executives, Goldman Sachs, Morgan Stanley, and Credit Suisse. If Facebook has a solid go to market strategy that will result in solid revenue, then I say they will launch.
However, the reality is that Wall Street does not care about mundane things like an executable business plan with legs. Wall Street wants hype. Based on that Wall Street will force Facebook to go public by stirring up the rumor mill and forcing Facebook to step up plans.
What I think does not matter.
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PJLouis |
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1/10/2012 edit
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