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It is the world's largest and most popular social networking web site it's also the most anticipated IPO in recent history.
Of course are talking about FaceBook.
-- Wall Street is drilling of the company's expected public debut our next guest says.
Yeah I think twice before French king.
This name into your portfolio Jason Zweig is a columnist.
For the Wall Street Journal Jason welcome thanks so you just wrote a piece saying that the frenzy initiated by Goldman Sachs offering these private shares.
Should it lets you fret if you were left out of this very.
Friday and special offering because it's not a guarantee that FaceBook is on a real good growth track right now.
Yeah I think they're really really the key issue here is that we've we've got a stock that's already priced now.
And it's priced -- at least 25 times the company's sales.
And we know very little about the financial performance of FaceBook even the people body into the private offering don't know much about it.
So effectively it's gone public while it's still private.
At a very very high priced so FaceBook is doing two billion in annual revenue you report but you're not -- can keep up the -- yeah I mean.
What a lot of people in the social networking business will tell you.
Is this business is all about the next new thing.
And FaceBook once was -- next new thing it's still hot.
But no one can be sure whether it's gonna stay hot.
So paying a very high price for it probably isn't a good idea where -- FaceBook get fresh capital I mean what could investors see in FaceBook that would drive its growth and so that FaceBook could follow the -- of a Google or an apple which also had.
You know that when -- get the stats for you in your reporting Google's sold initial shares -- ten times revenue apple 22 times so how could FaceBook near that.
Well I think one of the keys for FaceBook is expanding its gaming enterprises which are which are very very big and very fast growing.
The other key would be expanding internationally particularly -- to a market like China.
But obviously there -- privacy and government control issues when you get involved in that kind of growth pattern right we saw that with Google big time.
One asking about the Goldman Sachs relationship with Facebook's very cozy again according to reporting I got kind of kick out of this sad -- In your piece so basically what.
What Goldman Sachs did is they offered favored clients private shares in FaceBook gave them little time to commit that made it seem like a -- special privilege so.
Anything controversial at the least bit curious about this relationship between FaceBook and Goldman Sachs.
Well it's a little unusual I mean essentially every every time a company goes public in a traditional an initial public offering.
There's always -- for a buying frenzy that's get get that gets built up.
What happened here though was it all happened privately.
Among the very exclusive number of people in a very short period of time.
So that you didn't have an open market operating the way you normally would with the IPO did distort anything.
Well I think it might have been a lot harder to prices company ended at 25 times sales.
If it'd been entirely done out in the public shore.
So then let me ask is there specific metric or specific hurdle faced the cast -- crossed it to lock in its growth potential -- Meet what Goldman Sachs is forecasting its future to be.
Well if you're considering investing in FaceBook today the real question you would want to ask yourself is do I truly believe.
That this company can can sustain its path as one of the fastest growing companies in human history.
And if your answer to that is yes then maybe it's not so overpriced after all but most companies people have thought -- about in the past have not worked out.
But it's interesting social networking is such -- bad right now fast moving industry it'll be again so interesting to see if FaceBook.
Rides the wave or he gets replaced with some newer better function yeah exactly we'll see what happened -- Friday -- -- journalist ports here on going reporting break thanks.
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