FACEBOOK CEO Mark Zuckerberg took questions about the social network’s slowing revenue growth and its $1 billion Instagram purchase, as he kicked off a cross-country roadshow yesterday to promote its $10 billion (€7.7 billion) initial public offering.
Wearing his trademark “hoodie”, jeans and runners, Mr Zuckerberg fended off one investor who questioned the deal to buy photo-sharing developer Instagram, an acquisition analysts and media said may have been concluded too hastily.
The 27-year-old – whose majority control of Facebook worries some investors in terms of accountability – replied he would do the Instagram deal again if he had to, according to attendees.
Hundreds of investors packed the Sheraton Hotel in Manhattan and formed a queue around the block outside, watched by police and clipboard-carrying staff. This was in stark contrast to the more mundane nature of the average investor IPO presentation.
Facebook aims to raise about $10.6 billion (€8.13 billion), dwarfing the coming-out parties of tech companies like Google, and granting it a market value of up to $96 billion (€73.7 billion) – rivalling Amazon.com's.
Facebook’s emergence as a cultural phenomenon, whose beginnings were depicted in the film The Social Network, added a palpable energy and buzz to an event that was policed rigorously.Attendees were asked for multiple forms of identification and cross-checked against a list of names.
One investor joked that it should have been held in New York’s Madison Square Garden, home of the Knicks basketball team and a standard venue for rock concerts. “This is unlike anything we’ve ever seen,” said another investor.
Observers pointed to the outsized event as a sign of the high interest in one of the biggest retail-technology names to hit stock markets in years.
The eight-year-old social network that began as Zuckerberg’s Harvard dorm-room project has indicated an IPO range of $28 to $35 a share, which would value the company at $77 billion to $96 billion (€59 billion to €73.7 billion).
The size of the IPO reflects the company’s growth and bullish expectations about its money-making potential as a hub for everything from advertising to commerce. Many investors say they expect Facebook to raise its offer price range as the roadshow progresses from New York to other major cities such as Chicago, Boston and San Francisco over the next two weeks.
Mr Zuckerberg, who will have roughly 57 per cent voting control after the IPO, personally forged the expensive deal to acquire mobile app maker Instagram in a matter of days last month with little involvement from Facebook’s board of directors, according to media reports.
Asked about the deal, Zuckerberg said Facebook’s management had discussed a possible Instagram acquisition at length in several meetings. Facebook decided to act when it saw Instagram’s user data cross a “tipping point” from which they believed it would grow significantly, he said.
He said Facebook moved quickly to strike a deal when it became clear that Instagram was open to being acquired.
Zuckerberg was accompanied by finance chief David Ebersman, and chief operating officer Sheryl Sandberg. Investors managed to ask just five questions during the event, including a query about Facebook’s potential plans to enter China. Mr Zuckerberg noted that Facebook was blocked in China – as are YouTube and Twitter among others. – (Reuters)
