Facebook: web idol floats

Social networking giant Facebook increased the size and price of its initial public offering (IPO) this week as a result of strong demand for the shares. It added around 85 million shares to the IPO, and was set to raise around $15bn based on a higher mid-range share price of $36, $1bn more than expected earlier this month. The IPO implies that the entire company is worth about $100bn, more than Hewlett-Packard and Dell combined. Founder Mark Zuckerberg's stake would be worth around $17bn.

What the commentators said

For all the "hype" over the potential of this "global internet idol", said The Economist, Facebook "still has plenty to prove". A key question is whether it can "become a part of the fabric" of the internet, rather than "just a destination on it". Other social networking sites such as Myspace dwindled because they couldn't persuade users to stick with them. The jury is also still out on whether it can "adapt fast enough" to mobile computing. Its "clunky" mobile apps reflect its roots in the desktop internet era.

Already, "all is not rosy in Facebook's garden", said Siliconrepublic.com. General Motors has decided to stop advertising on the site because it doesn't think it's getting a decent return. Revenue growth from Facebook's online advertising business has slowed of late.

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Perhaps these developments aren't surprising, said Ian King in The Times. A recent poll of users shows that 57% never click on advertisements when they're on the site, and another 26% hardly ever do. Advertising generates 82% of the company's revenues. So should Facebook really be on an implied 16 times revenue, compared to Google's six times? Of course not, said Allister Heath in City AM. "Bubblenomics is back with a vengeance."