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Is Facebook worth what Facebook says it is?

Even Facebook can't decide what its worth, and the analysts are getting cold feet too.

The word from the IPO roadshow is that there is considerably less interest in Facebook shares that what the company and the bankers would like us to believe.

Bloomberg is reporting "weak demand" for the shares, particularly in the light of growing subscriber numbers and falling earnings.

A number of financial advisers and bankers are quoted, "Expectations on Facebook are way too high," said Mitsuo Shimizu, a market analyst at Tokyo-based Iwai Cosmo Securities Co. "Given its fundamentals, the company doesn't look anywhere cheap in valuation."

"It’s overvalued at that price [the expected price range of $28 - $35]," said Filippo Garbarino, who oversees $50 million at Frontwave Capital Ltd. in Chiasso, Switzerland. "Investors are becoming more selective and there are quite a few fallen angels around, like Netflix. Those who buy Facebook at these levels are more speculators than investors."

The initial price will be set on May 17th, with expectations of a launch the following day.

Of related interest is the fact that Facebook itself sees no pressure to value itself very highly.

For various tax and accounting reasons, the company is obliged to place a value upon its shares at various times throughout the year.  The folks at Business Insider charted this sequence of valuations to reveal an interesting graph.  The highest Facebook has ever valued itself was $31/share, and for the major part of the past nine months, it has sat quite stably at $30.

One might expect that contrary to iTWire’s previous suggestions, the initial price will struggle to top $28 and beyond that there is little upside to be seen.


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