4 Reasons Why Facebook IPO is Overrated (Hint: General Motors Drops Ads, Eduardo Saverin)


Half of Americans think the upcoming Facebook IPO (which would value the company at $100 billion, above Kraft, Ford and Disney) is overrated, and they’re right! Here are 4 reasons why.

1. It's "a Passing Thing":

According to a new Associated Press-CNBC poll, most Americans think the Facebook fever won’t last, and that the social network’s upcoming $100 billion IPO valuation is too high. There is no denying Facebook’s success. However, the bigger young tech companies get the bigger the reminder of the 1995-2000 Dotcom bubble and subsequent tech flops. Who’s to say Facebook is not the next MySpace?

2. Facebook Ads:

The same poll found that 57% of Facebook users say they never click on the social network’s ads or other sponsored content when they use the site. This, along General Motors’ announcement that it will stop advertising with Facebook, as paid ads on the site "have little impact on consumers’ car purchases" should sound an alarm among investors who rely on Facebook's capacity of capitalizing on the enormous amount of personal data they mine by selling highly targeted ads. 

3. Eduardo Saverin: 

The news that Facebook co-founder Eduardo Saverin was dropping his U.S. citizenship to avoid paying taxes on Facebook’s upcoming $100 billion IPO is the last public relations scandal of a company that already has generated its share of controversy regarding privacy issues. Saverin (30) will save at least $67 million in federal income taxes from a Facebook stake worth as much as $2.89 billion.

4. User Backlash: 

Facebook’s recent acquisition of 2-year old mobile photo sharing application Instagram for $1 billion (a move that many saw as an attempt to co-opt and destroy a potential competitor) generated backlash among many Instagram users who threatened with deleting their accounts. And the backlash continues with the Twitter tag, #10FacebookTips, which mocks popular "10 Facebook Tips to Grow Your Business" type of advise with tips such as: "#10FacebookTips delete your FB account."