Facebook IPO

Facebook may be a good bet for investors now; but regulatory problems lie ahead 

IT ALL began as a lark. Mark Zuckerberg posted pictures of his fellow Harvard students online to let viewers comment on who was hot and who was not. Eight years later, Facebook is one of the hottest companies in the world. On February 1st the social network announced plans for an initial public offering (IPO) that could value it at between $75 billion and $100 billion (see article). This is extraordinary. Investors believe that a start-up run by a cocky 27-year-old is more valuable than Boeing, the world’s largest aircraftmaker. Are they nuts?
Not necessarily. Facebook could soon boast one billion users, or one in seven of the world’s population. Last year it generated $3.7 billion in revenue and $1 billion in net profits. That is nowhere near enough to justify its price tag.
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