Facebook IPO won't be derailed, analysts say

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."

In recent weeks, speculation about the IPO date had varied widely until multiple reports this week pointed to the mid-May offering.

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."