All About Facebook's IPO

Jeff Macke and Debra Borchardt break down the deal.
8:03 | 02/01/12

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Transcript for All About Facebook's IPO
Wall Street is waiting with bated breath and I think we don't know why today it is expected at FaceBook will filed papers for its IP setting the stage for one of the biggest offerings. In the history of Internet companies joining me now to share their insights on this developing story -- -- On our partner Yahoo! finance endeavor abortion -- IPO experts from the street. Thanks to both of you Debra I want us start with you. Things we expect to learn from the papers once they're filed with the SEC I mean this is such an opaque company. That's right near doubling opening that come on now as we like that day on Wall Street. We're gonna find out how much money they make and how they really make it that's something we not really -- we're gonna find out you know -- there any legal proceedings against them. What kind of risk that the company has also -- -- planning their future growth are gonna wanna tell us about so that people will -- the -- which of the whole point of this. And -- won't find out how much those executives make. And I have a feeling that's going to -- Here's and members Jeff let's -- about what people really want to know here. We just -- the valuation of FaceBook could be as much as 100 billion dollars. Is the company really worth that much. No but like -- elaborate I assume you please elaborate. But isn't it the company's gonna have to grow into that valuation and that's going to be the question -- point. In August discoveries were -- one billion users that's 14% of every man woman and child on the entire globe. I think that we've left our fast growth days behind us with FaceBook I'm not sure -- they're gonna explain how they're going to get that next level -- this as one. The jury sellout and boy and -- the question is how to get people about the stock and talk and they stopped them and I'm pretty worried about folks at chase this thing higher. Well pleased to my next question which is who is going to get these shares right off the bat. Jeff your kind of coming out strong saying that you don't you think people should wait Deborah what do you think. Well I think that as you pointed out only so many people -- gonna get this because they're not filling that much of the company in the public market that makes you wonder why they aren't -- they're gonna go through all this trouble. And only fell a small portion the company I think I'll come back with a secondary offering and release more stock later so. I think that's right -- maybe you'll see a pop in the beginning but those people that -- this first round. They may get hurt when a second round comes out just a number of other tech companies like -- -- Zynga and group bought all go public last year all created a lot of buzz did we learn -- -- from those -- That's not -- -- IPOs but those with. -- in the Internet space has what you're especially ones anyway I think this FaceBook IPO is a nice example of how to squeeze the most money. And it possibly cannot -- on -- as they're gonna constrain the supply of shares. They're gonna bleed on the market they're creating a huge amount of demand for it that's not to the benefit of shareholders that's the benefit of the venture capitalists. The insiders -- -- company. -- it's it's just not something the public wants to be apart as far as the -- one which is what are gonna filed today is concerned I think it'll make better reading than FaceBook will make a stock. So every agreement that that the average Joseph shouldn't just go out -- try to buy this stock at any time in the near future. Well I think the average Joseph might be interested in getting involved because -- -- -- -- -- but I would agree you have to really approach it with a lot of caution. We keep hearing about these 800 million users but what we're also gonna find out if that's one at how much -- really on the site you know a lot of them. They -- they've set up a page and never come back -- and then we're gonna get all the information about advertising revenues so how many people on FaceBook and really click on the man. -- to the point of that and I like jumping Jack I had the -- the more intrusive FaceBook gets. The less sexy it's going to be less appealing as the users if they use that information that's my personal information. To extract ad dollars from -- frankly just the idea that creeps me out a little bit and I think FaceBook post peak in terms of their hip missed the start. -- monetize in these eyeballs as they sand or they'll. Is going to be what it's all about I'm not sure FaceBook has a path to doing so. -- -- the quantify the eyeballs like you both say. We're here the company has picked SV -- -- -- that seems obvious but we don't know whether plans to trade on the New York Stock Exchange -- -- as a Deborah doesn't ultimately matter to traders. It really does matter and it matters a lot. To these exchanges because they're both fighting for volume volume has been -- -- And they're really hoping that whoever gets it's going to bring people back to the market get them involved and -- again and start. Being in a part of the stock market you know it's going to be cheaper for them to go to NASDAQ where there is a market. Cap on how much they'll spend to be lifted. If they go to the stock exchange it could cost -- a lot more jet and a prediction parent which whittled down. Now they'll probably get NASDAQ it's really nasdaq's turf to defend if they don't get these high tech companies come straight out of the chute. It's a problem for NASDAQ and be really cool for the New York Stock Exchange to get -- but in terms of shareholders themselves six of one half dozen about it. -- just ask you this space -- Morgan Stanley we do know that to leave the IPO how much of a -- is this going to be -- that bank. You know it's a big one there's not going to be a tough follow on. Business so it's a prestige thing. And it's also another example of FaceBook sort of running this like a little exclusive club with a giving people taps only certain people get -- shares only certain people get to list the stock. You know -- it's -- examined -- to be the bank -- Goldman Sachs I'm sure there is just blood matches death fights going on behind the scenes. But again it's one of those things that matters to Morgan Stanley clients can now get their allocations of this IPO -- to get more shares to flip right away. But -- it's in terms of the investment banks getting follow on business it's not gonna amount to a lot less -- PO market picks up. I just gonna take a look at an interesting list that I was -- looking at earlier sent out over the ABC email. -- of the investors there are more than 500 investors indices that company but we have a list of some of the folks that stand to benefit. A lot of them already millionaires frankly. It -- his company goes IPO I just think that's an interesting let Liz you see at the top of that at Peter Steele. Reid Hoffman mark Pincus Microsoft Goldman Sachs and Elevation Partners that -- -- -- billion dollar deal. We're talking about but -- -- We -- -- number of other banks who stand to gain because they'll be playing a supporting role do you think there'll be any hard feelings among those companies. Now this is how. IPO market -- -- always have a lead underwriter and and you have several more on the front page of of the red Herring prospectus. What I think is going to be really interesting is that. I really think that most of these bankers are in it for the the beginning they wanna get their money and -- they want to run there's not as much interest in the secondary market as there used to be in the past. You know one Jeff mentions Morgan Stanley's clients are going to get that stock. He thought about the institutional clients are gonna get it not GL oh six pack and Betty bungalow they are not getting any shares it's going to be the mutual funds the pension funds -- You can't sell a lot of that I had -- what they care because that's the next hot thing it's been so long to -- IPO shares we get trade and flip. And for every Google out there which is the classic example people point currency -- bought on day one and -- -- your money. There's a lot of Linkedin -- there's a lot of pandora's lot of things that you don't necessarily want to be by. All the PW listed in that that little -- -- they're not just billionaires. But -- insiders and their sharp money I don't know why folks insist on buying things from rich people. But if a rich person knows more than you do about what they're selling perhaps -- be better to buy from someone a little less intelligent. It's interesting. Point Deborah we're hearing that this stock as it is probably won't hit the market and -- may anyway what happens between now and then. -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- But in a normal company you're going around and you're trying to convince people would you want this stock. Right -- -- RI PO experts from the street and of course just MacKey co host of breakout. On Yahoo! finance thanks so much for both of your insights today thank you. Perhaps -- thank you.

This transcript has been automatically generated and may not be 100% accurate.

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