Facebook IPO – The Rising Tide Has a Noticeable Undercurrent

Facebook’s pending IPO has become quite a spectacle. It is sure to meet published expectations. There is a real possibility that the IPO will result in a market capitalization in excess of $100 billion. This said, there are two underlying details that are cause for concern:
1) The exit of early investors, mostly venture capitalists. Some of the biggest investors, have, in fact, dramatically increased the number of shares that they will be selling. This may scare off institutional investors.
2) The sudden exit of one of Facebook’s largest paying advertisers, General Motors. GM claims not to have realized sales from its advertising investment. This is coupled with claims that Facebook founder, Mark Zuckerberg, has yet to get serious about advertising. This is a big concern for a company that realizes 85% of its revenue from Internet advertising. More big investors could exit as a result.

Problem number one will disappear if problem number two is adequately addressed. There are about 100 billion reasons that Facebook will want to put considerable creativity and brainpower into doing just that.