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Facebook's IPO: What It Means For You

LOIC VENANCE/AFP/Getty Images(NEW YORK) -- At the same time the price and public clamor for Facebook's blockbuster IPO is rising, experts' expectations for the company's performance are in decline.

The company on Tuesday raised the asking price of its offering -- expected on Friday -- from a range of $28-$35 to $34-$38.

In a survey of 124 portfolio managers and buy-side analysts conducted by Rivel Research Group, only 8 percent said they expect to see Facebook trading above its offering price six months after the initial public offering.  Thirty-one percent said they expect the offering to have no impact whatsoever on the overall market for IPOs.

Yet excitement among ordinary investors for the IPO continues to run high, given that past IPOs have made some investors rich.  An analysis by ABC News shows, for example, that a share of Johnson & Johnson bought at the IPO price of $375 would be worth $10 million today.  A share of Apple bought at the 1980 IPO price of $22 would be worth about $44,800 now.

The fact that Facebook's stock has been virtually impossible for little guys to buy in advance of Friday's offering may only have heightened the shares' appeal, on the principle that what people want most are things they cannot have.

Jay Ritter, an expert on the history of IPOs and a professor of finance at the University of Florida, says Facebook's offering is indeed historic.

"This is more than just another IPO," he says.  "It's the largest ever for an Internet company, and among the largest for any in U.S. company in history."  It's unprecedented, he says, for a company just eight years old to receive a market cap of $100 billion.

Ritter says other recent IPOs have raised comparable amounts, including Visa's IPO and GM's in 2010.  Both companies had name recognition: "Everybody knows GM.  Lots of people have a Visa card."  Yet neither offering generated anywhere near the excitement as Facebook's.

Of course, neither company had a chief executive of Mark Zuckerberg's star power or youth appeal.  And, says Ritter, neither had Facebook's "blistering" growth rate.

"People confuse rapid growth with a good investment," he says.

Now the $100 billion question is, can Facebook maintain that growth by better monetizing its 900-million-plus users?

Copyright 2012 ABC News Radio

ABC News Radio