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Facebook Readies Insanely Large IPO

The real question of course is, after the initial influx of cash to “The Zuck,” is will they profitable and make money for future investors.  No doubt nearly every single Facebook employee will be multimillionaires on paper after the IPO (if they have stock options), one wonders if they’ll still be multimillionaires in a few years’ time when they can finally cash them out.

Facebook Inc. and Yelp Inc. are set to lead the biggest year for U.S. initial public offerings by Internet companies since 1999, testing demand for IPOs after investors lost money on Zynga Inc. and Pandora Media Inc.

With Facebook considering the largest Internet IPO on record and regulatory filings showing that at least 14 other Web-related companies are planning sales, the industry may raise $11 billion next year, according to data compiled by Bloomberg. That would be the most since $18.5 billion of IPOs in 1999, just before the dot-com bubble burst.

While surging sales growth may lure investors to Facebook, the biggest social-networking site, heightened stock volatility and Europe’s sovereign-debt crisis could temper the pace of global IPOs after a 38 percent decline in 2011. Even Internet companies may cut valuations for their offerings after Zynga, the largest developer of games for Facebook, and online-radio company Pandora slumped following share sales this year, according to researcher Morningstar Inc.

“Technology is still a place where you can get outperformance in terms of growth against a tepid market backdrop,” said David Erickson, New York-based global co-head of equity capital markets at Barclays Plc. “You might see more IPOs emerge if we get resolution in Europe or stability that makes investors more comfortable with the overall market.”

Zynga (makes of Farmville and other annoying games), which has its financial well-being tied to Facebook through its games, has lost money and value since it went public.  Earlier this month, it was reported they’ve lost over a billion dollars in value since it went public.

Zynga now trades around $9.30 or so a share.  A price which is pretty much a steal for a technology company.  Few analysts however see it going any higher than that price in the coming months.

Many investors were burned in the first tech bubble of the late 90s when Dot.com company CEOs were making venture capitalists look like fools.  Companies like Facebook and other social network firms may look like crown jewels right now — and at their IPOs — but no one knows what the future is going to bring, or what might replace Facebook in the coming years.

As for overall stability in the markets…one wonders if that is even possible in 2012 and beyond.

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