Facebook estimates that its net proceeds from the sale of its common stock will be approximately $5.67 billion, assuming an IPO price at the midpoint of its range.
The company's advertising business is attracting plenty of attention prior to its IPO. Advertising accounted for 85% of Facebook's total 2011 revenue.
In a note released on Monday, Evercore Partners placed a valuation of $140 billion to $160 billion on the social networking giant, thanks to the potential of its advertising business.
Evercore analyst Ken Sena explained that several changes are underway in Facebook's advertising operation, prompting the high valuation. "[Facebook's] display business will give way to sponsored content faster than anticipated," he said, citing its high Return on Investment (ROI) for marketers and suitability for mobile devices.Facebook, according to Sena, is also creating an "ad network" for publishers, which converts them into advertisers through "enhanced" sponsored features. "Instead of Facebook managing their partners' ad sale needs, Facebook manages their viral distribution needs for a portion of revenues," he added. Evercore Partners has not yet initiated coverage on Facebook. Sterne Agee analyst Arvind Bhatia initiated coverage on Facebook with a buy rating and a $46 price target on Monday. In his note, Bhatia says that Facebook's IPO is worth the risk, predicting that the company could be as disruptive as Google. --Written by James Rogers in New York. >To follow the writer on Twitter, go to http://twitter.com/jamesjrogers. >To submit a news tip, send an email to: firstname.lastname@example.org. Check out our new tech blog, Tech Trends. Follow TheStreet Tech on your wireless devices.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV