Facebook expects to hit the Nasdaq for its first day of public trading on May 18. Its IPO will be the largest social-media public offering ever, as well as one of the largest IPOs in the past few years.
And yet, investors’ feelings have been somewhat mixed. Among things cooling the fire have been Facebook’s uninspiring first-quarter earnings report, as well as the struggles of other recent social IPOs like Groupon (NASDAQ:GRPN), Zynga (NASDAQ:ZNGA) and Pandora (NYSE:P).
Well, investors aren’t alone on their indecision. To get a different perspective on the Facebook offering, I talked to five tech-sector CEOs — only to find that their opinions run the gamut, too.
Here’s what they had to say:
Dave Scott: CEO and Founder, Marketfish
“As an investor, I’m buying. When Zuckerberg was in his Harvard dorm room, I don’t believe he was thinking about how Facebook’s stock price would trade; rather, he was highly focused on Facebook’s users and the experience they would have. This will be the key to Facebook’s success as a publicly traded company.
“Facebook is sitting on top of the one of the largest gold mines in the world in terms of data. But the question remains — can Facebook turn information into revenue while ‘keeping it real’ with its 900 million users? Right now, Facebook is failing to innovate on the advertising side. If Zuckerberg can innovate by breaking through traditional barriers into industries such as job searching, that’s when investors can be confident over the long term.”
Larry Lang, President and CEO, QuorumLabs
“I would pass on Facebook stock when it’s first debuted, recalling that IPO often stands for ‘it’s probably overpriced.’ The initial volatility will be turbulent for Facebook, given its exceptional visibility to the general public, whose typical experience with such investments is best summarized by Stevie Wonder: ‘When you believe in things you don’t understand, then you suffer.’
“Facebook is also an exceptional IPO because it has already traded extensively in secondary markets. As the CEO of a startup company and board member of others, I’m well aware of how this unintended consequence impedes technological innovation from benefiting the economy. I’ll be interested in the longer-term market response to Facebook’s cloud approach.”
Ethan Oberman, CEO, SpiderOak
“Count me in … for now. The upcoming Facebook IPO is one of the more anticipated IPOs in recent history; after all, the company has successfully changed the face of how we think about and interact with social media. However, investors interested in a longer-term prospect should understand the viability of Facebook’s revenue model and evaluate closely how government policies and privacy rights will impact success.
“Will Facebook successfully mimic Apple and monetize the mobile realm? Will they forge other yet ‘undefined’ revenue streams? These questions and more investors should consider.”
Gaurav Manglik, CEO and Co-Founder, Cliqr, Previously Known as Osmosix
“I’m a definite buyer at the IPO price. As the CEO of a rapidly growing cloud startup, I have nothing but respect for Facebook and its ascent into the publicly traded markets. The paradigm for social media changes every time a new competitor hits the market with a disruptive idea. Facebook’s management team will need to demonstrate to investors that they are going to be relevant five to eight years down the line.
“Clearly, Facebook has dominated every social media company when it comes to how people share information.”
Scott Sellers, CEO and Co-Founder, Azul Systems
“In my view, the Facebook IPO should be viewed by potential investors as ‘fundamentally strong, valuation wrong.’ While Facebook certainly has competition, it takes a lot of missteps to severely erode a billion users. Facebook has the platform, the engineering talent and the muscle to find a successful mobile strategy, which is key to its growth, and I believe they have just scratched the surface on gaming, another high growth opportunity for them to exploit.
“Facebook feels to me fundamentally strong, but that doesn’t make it a great investment as the valuation is estimated to be astronomically high and likely unsustainable. Like most high-profile IPOs, I expect their stock will rise after the offering, and if they execute on their growth opportunities, then the valuation and the stock price will be justified, but there’s very real risk that with ‘just reasonable’ business performance that their valuation will decline to more typical levels.”
Tom Taulli runs the InvestorPlace blog IPO Playbook, a site dedicated to the hottest news and rumors about initial public offerings. He also is the author of “The Complete M&A Handbook”, “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli or reach him via email. As of this writing, he did not own a position in any of the aforementioned securities.