Slideshow: Facebook and the Ghosts of IPOs Past

As venture-backed IPOs go, Facebook is in a class of its own.

Never has there been an offering so large. At up to $16 billion, based on recent reports, it’s multiples ahead of the next-biggest runner-up, Google, which raised a comparatively paltry $1.7 billion back in 2004.

Nor has there been a venture-backed company poised to make its market debut at a higher valuation. Even Google, which made its initial market cap of $23 billion, pales in comparison to Facebook’s projected $100-billion plus.

So given the uniqueness of the offering, it bears asking whether there’s much to be learned about Facebook’s prospects from a perusal of IPOs past.

The general takeaway is that most of the largest venture-backed have fared poorly, with the exception of Google, which has of course done exceptionally well. Given that, it’s unclear exactly what lesson to take away, but there are few possibilities. One is that investing in large venture-backed IPOs is generally a bad idea. Another is that investing in large venture-backed IPOs can be a good idea when those companies are profitable and are leaders in a growing industry, but is a bad idea when the offering is for a deeply in-the-red company that really needs the capital. (An extension of the idea that the safest person to lend money to is someone who doesn’t need it.)

With a profitable model and billions in quarterly revenue, Facebook is clearly in the “doesn’t need it” category. The wild card, however, looks to be around valuation. To sustain its lofty market cap over the long term, the social networking site will have to demonstrate that it can continue to grow revenues and profits as well as keep the people behind its nearly one billion profiles coming back.

In the following slideshow, we take a look the six largest venture-backed offerings of the past decade and how they have performed post-debut.

[slideshow]
[slide title=”Google”]
Offering Size: $1.67 billion
Offering Date:  August, 2004
Post-IPO Market Valuation: $23 billion
Current Valuation: $205 billion

[slide title=”Yandex”]
Offering Size: $1.3 billion
Offering Date: May, 2011
Post-IPO Market Valuation: $8.2 billion
Current Valuation: $7.1 billion

[slide title=”MetroPCS”]
Offering Size: $1.15 billion
Offering Date: April, 2007
Post-IPO Market Valuation: $8 billion
Current Valuation: $2.4 billion

[slide title=”Zynga”]
Offering Size: $1 billion
Offering Date: December, 2011
Post-IPO Market Valuation:  $7 billion
Current Valuation: $6.1 billion

[slide title=”Clearwire”]
Offering Size: $600 million
Offering Date: March, 2007
Post-IPO Market Valuation: $3.3 billion
Current Valuation:  $1.5 billion

[slide title=”Vonage”]
Offering Size: $531 million
Offering Date: May, 2006
Post-IPO Market Valuation: $2.65 billion
Current Valuation: $384 million

[/slideshow]

Photo credit: Shutterstock