Facebook’s future far from certain after site’s flotation

An Associated Press/CNBC poll found that just 43 per cent of respondents believe the social networking website has staying power, with the rest dismissing it as a passing fad.

But the survey has done little to calm expectations over this Friday’s initial public offering (IPO), with Facebook yesterday upping its share price, a move that could give the firm a $104 billion (£65bn) price tag.

But the massive figures involved in the IPO have led to scepticism that investors may be getting carried along by the hype, inflating the company’s worth in the process.

Just three in ten stock market investors questioned in a poll said the expected share price was fair – 58 per cent who said the firm was being overvalued.

Among the wider American public, half said the price tag was too high, with a third suggesting it was justified.

Scepticism grows with age in regard to Facebook. Of those aged under 35 – a demographic that includes the firm’s founder Mark Zuckerberg, who turned 28 on Monday – almost two-thirds said Facebook stock is a good bet. This compares with less than 40 per cent of retirees and half of those in their late 30s and early 40s.

But even among the young – about 55 per cent of whom check their Facebook pages at least once a day – a slight majority believe its appeal will fade.

Overall, some 46 per cent of respondents said they believe the social networking site is a fad of the current age and would one day rank alongside the likes of MySpace as a largely forgotten entity.

John Lonski, chief economist of Moody’s Capital Markets Group, agrees with those who suggest that despite the site’s massive popularity today – about 900 million users log in at least once a month – Facebook’s long-term ongoing success is far from certain.

He said: “When you are looking at the valuation of share issues for high-tech companies you have to heed the risks that change is constant in the industry. What is very popular today and seems will be very profitable forever may not be in the same position in a few years.

“There is a lot of volatility and risk in high-tech and it is not clear that Facebook will remain dominant in the sector.”

Mr Lonski fell short of saying outright that the stock was overpriced, but he added: “If there is a bubble in the market, you will find it in high-tech. If you can tolerate the risks then it could be good, but if you can’t, it is definitely one to avoid.”

Not that there will be much stock to pick up for the part-time investor. Of the 180 million shares up for grabs in the initial IPO, most are expected to go to people with connections to the company or to large banks and brokers involved in the sale.

Even after the flotation, Mr Zuckerberg will remain in control at Facebook, holding 57 per cent of its voting stock.

The AP/CNBC poll, revealed mixed views of the young tech guru. A fifth of the American public had never heard of him and 30 per cent held no real opinion of him. A further 14 percent said they don’t like him, leaving just a third of Americans with a favourable impression of the Facebook founder.

It emerged yesterday that his co-founder, Eduardo Saverin, had renounced his US citizenship – a move expected to save him hundreds of millions of dollars in taxes related to the IPO.

Brazilian-born Mr Saverin, who has lived in Singapore since 2009, helped Mr Zuckerberg create Facebook in 2004 when they were students at Harvard.