GM Ad Cancellation Does Not Hurt Facebook IPO

Investing

Published: May 16, 2012 6:26 am

Investors do not seem to care that GM (NYSE: GM) has dropped Facebook as an advertising medium. The press made a great deal of the news, but GM’s investment was only a few million dollars over the last year. Maybe skeptics about Facebook’s future reason that other very large advertisers will be unhappy with the result of their marketing on the social network and will withdraw as well.

But, in the face of the GM news, Facebook as raised the number of shares it will sell in its IPO to 421 million,which is up 25% from the number expected just a few days ago, according to several media reports. This would set the amount of money collected by Facebook at $16 billion, and value the company at over $110 billion. A great many analysts believe that Facebook’s valuation is much too high.

Whatever the reason. that has not stopped a nearly insatiable appetite for ownership in the company. Perhaps Facebook users want to be stock holders are well. It works that way with Apple (NASDAQ: AAPL), so there is a precedent.

Douglas A. McIntyre

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