The Right Way to Buy Facebook

The Wall Street Journal reported Thursday, as Facebook’s initial public offering is slated for May 18. Between now and then, management will go on its “roadshow” to explain its strategy to potential investors, and excitement over the deal is likely to grow.Facebook brought in revenues of just over $1 billion last quarter, up 45% from the same quarter a year ago. If that growth rate holds for the rest of the year, Facebook will bring in $5.4 billion in revenues this year. The IPO details suggest a valuation of $85 billion to $95 billion, and shares could easily open much higher than the offering price. So Facebook may sell for 10 times revenues or more by the time ordinary investors buy in, more than five times as expensive as the average stock.

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The Right Way to Buy Facebook