The Facebook IPO just got big-name support from the tech world.
Wozniak, who built the first Apple computer with Steve Jobs and co-founded the company with him in 1976, also commented in the May 12 interview that he thought Facebook founder Mark Zuckerberg combines the talents of the late Jobs and of Wozniak himself.
"I was thankful to have a partnership with Steve Jobs and I see Mark Zuckerberg closer to the combination of us," said Wozniak. "When he speaks he speaks with a lot of idealism for the users and a lot of good ideas for the product overall."
The favorable Facebook fodder came just as Facebook upped its projected IPO price from $28 – $35 per share to $34 – $38 per share. That gives the social networking company a valuation exceeding $100 billion.
Facebook stock (Nasdaq: FB) is slated to start trading Friday.
Facebook's Mobile Strategy a Concern
Despite the investor fervor surrounding the Facebook IPO, some critics have questioned the company's future growth – specifically its mobile strategy, or lack thereof.
Facebook said that more than half of its 900 million users now access the site through a mobile device. In fact, it stated in its IPO filings that user growth – especially mobile users – has outpaced revenue growth.
But the problem is that mobile ads are smaller and harder to read making it less likely that a user will make a purchase, and therefore making Facebook less appealing to advertisers.
However, there is the "If you build it, they will come" attitude that Facebook will find a way to monetize the increasing trend toward mobile. Even if Facebook user growth continues to outpace revenue there is still a growing user base from which to profit.
Facebook is trying to adjust. The company increased its efforts to bring in revenue from mobile devices with the introduction of their App store. The Facebook App Store should roll out shortly, increasing revenue by allowing software developers a chance to sell their products on the site.
How Will Facebook Do?
Amid all the commotion and hype regarding Facebook's IPO -and despite Wozniak's endorsement – some investors and analysts believe Facebook is overvalued.
Barron's even downgraded the stock, which has yet to go public.
If Facebook debuts at $35 per share that would value the company at 70 times its projected earnings of 50 cents a share for 2012. Compare that with Google Inc. (Nasdaq: GOOG), which trades at over $600 a share but less than 15 times its 2012 earnings estimate.
Yet, to some investors a price of $35 per share compared with $600 looks very reasonable and some would say cheap.
There's no reliable precedent for how Facebook will do. Recent tech IPO's from Linkedin Corp. (NYSE: LNKD), Zynga Inc. (Nasdaq: ZNGA), Groupon Inc. (Nasdaq: GRPN), and Pandora Media Inc. (NYSE: P) have met mixed results.
Linkedin's share price doubled on its first day of trading and currently trades well above the IPO price. However, Groupon saw a similar spike on the first day with shares jumping 50%, yet the company currently trades around half the IPO price, even with an almost 30% jump in share price this week.
Facebook's long-term outlook is shaky. It needs to continue to deliver growth in earnings and find out consistent ways to make money off of mobile users or else the Facebook IPO could be the beginning of the end for Facebook.
Related Articles and News:
- Money Morning:
Facebook Takes a Step Closer to Its Own Search Engine
- Money Morning:
Facebook App Store Will Boost Popularity, Profit
- Money Morning:
Facebook IPO Roadshow Continues without Retail Investors – and Zuckerberg
- Bloomberg News:
Apple Founder Wozniak to Buy Facebook Regardless of Price