For Facebook to improve its advertising product, says Kim, would take years of effort. He questions whether Zuckerberg has the desire or the will to do that. "They talk about ads as if they were a necessary evil," says Kim of Facebook. "Zuckerberg's letter to shareholders was 2,500 words long. It mentioned advertising exactly once."
Would Kim buy the stock? "I'd certainly be interested—but with the caveat that it would have to be one of my longest-term holdings. You'd have to be willing to wait." The reason, he says, has to do with the amount of time and effort Facebook would have to spend for it to approach Google's revenues. Google has ten times Facebook's $4 billion in sales. "If they're going to get the extra revenue from ads, they've got lots of catching up to do."
As for Ritter, would he buy the stock? And if so, at what price? "My personal decision would be about $40 a share," he says. "It will very likely go up the first day. But if it gets over $40, the upside potential is so limited I would not want to buy."
How much turbulence does he expect Facebook's IPO to create in the stock market overall? Isn't making a $100 billion offer tantamount to throwing a piano into a swimming pool? No, he says. "I don't think it's going to have a big impact." The total market cap for U.S. stocks, he says, is $16 trillion. Facebook's IPO "represents less than one tenth of 1 percent of the total market cap. $100 billion gets traded on a typical day."
Might excitement over the IPO divert investors' attention, in a way that might create opportunities for hanky-panky-- in the same way that crooks, when they want to rob a bank, wait for a diversion? Again, probably not, says the professor. But he agrees that the hoopla over Facebook may cost the American economy in another way.
"In Europe," he explains, "when there's a World Cup soccer match, a lot of employees watch it when they should be working." There have been studies, he says, showing that when someone's team is winning, their productivity suffers. "Some people in the financial community," Ritter predicts, "will be watching their screens Friday to follow Facebook. But I hope the vast majority of American workers will be paying attention to their day jobs—including me."