As the expected date of Facebook's long-awaited initial public offering nears, analysts and investors are taking a last, close look at the financial, legal and other details that could help or hurt what many observers expect will be the biggest IPO in tech history.
Facebook is expected to launch a coast-to-coast roadshow for financial analysts on Monday as most watchers reportedly agree that the company has settled on a May 18 date for the IPO.
Few question whether the IPO will be a success -- most expect Facebook will finish the day valued at $75 billion or more, though some are keeping a close eye on some potential pitfalls.
"This one is going to keep people on the edge of their seats both because of the relative inexperience of Facebook's CEO and how big this is expected to go," said Rob Enderle, an analyst with the Enderle Group.
"The company isn't quite as well situated as it was," Enderle added. "There are increasing concerns surrounding their future revenues, the Instagram acquisition, which bypassed the board, and increasing litigation risk. There is a lot of drama surrounding this property at the moment -- and that can scare off investors."
The company's pre-IPO roadshow, where top executives pitch the potential value of Facebook stock to potential investors, is expected to include stops in New York, Boston, San Francisco, Chicago, Baltimore and possibly Los Angeles.
And while interest and excitement around the IPO continues to gain momentum, Facebook executives should expect to face some some tough questions.
For instance, two high-profile and high-budget Facebook acquisitions in April have raised eyebrows: The company agreed to pay $1 billion for Instagram and $550 million for patents filed by AOL and owned by Microsoft.
On top of that, last month Facebook released financial data showing that first quarter 2012 profits were 12% lower than the year-earlier period.
On the legal front, Facebook in March was hit with a lawsuit filed by Yahoo that alleged that the social networking firm infringed on 10 Yahoo patents. Since then, Yahoo has added six more patents to the list.
Just yesterday, Facebook filed documents with the SEC reporting that it expects the initial share price to fall between $28 and $35, which would bring a valuation of $60 billion and $75 billion, far lower than the $100 billion initially predicted by industry experts.
"They'd probably like to have a bit stronger financial results backing them up," said Dan Olds, an analyst at The Gabriel Consulting Group. "Weaker than expected advertising revenues probably trimmed a bit off the offering price."
"On the other hand," he added, "Facebook is the 800-pound gorilla in social networking, the hottest industry segment these days. They also have considerable revenues, they're profitable, and their track record proves that they've put together a compelling package that can attract and hold users." He added that none of the issues Facebook is dealing with now should significantly blunt the success of its IPO.
"There isn't any question that Facebook is going to be the biggest IPO in tech history," he said. "At close to $100 billion, it's about four times the size of Google's initial valuation, which is, as we say in the tech world -- damned big."
Patrick Moorhead, an analyst with Moor Insights & Strategy, said he doesn't see anything that could pop up in the next few weeks that could derail a very successful Facebook IPO.
"Facebook is as well-situated for an IPO as I have seen in a long time," Moorhead said.
Enderle, though, did note that any problem -- such as a lawsuit, general economic turmoil or negative disclosures about a Facebook executive -- could throw a wrench into Facebook's money-making plans.
He added, though, the odds of such trouble coming before the IPO are now quite slim.
"They're going to sell out their offering easily at a price that values the company at around $95 billion, I think," Olds said.
"The real question is -- is it a good investment or will it fizzle out over time? It's a frothy valuation by traditional measures, with the price equaling something like 33 times revenue. Facebook will need to grow both revenue and profits at a quick pace over a lot of years to continue to justify and support that kind of valuation," Olds added.
Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin, or subscribe to Sharon's RSS feed . Her e-mail address is email@example.com.