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Todd Harrison: Is Facebook Google's second coming?

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Social-networking giant Facebook filed for an initial public offering on Wednesday - and the odds are the stock will find itself a lot of friends.

Last week, at the 2012 World Economic Forum, Facebook Chief Operating Officer Sheryl Sandberg offered: "If this is seen as an opportunity for jobs and for people to use their work to change the world, that's what we want to be a part of."

The language is reminiscent of Google's "Don't Be Evil" mantra, which it referenced in its 2004 Founders' IPO Letter: "Don't be evil. We believe strongly that in the long-term, we will be better served - as shareholders and in all other ways - by a company that does good things for the world, even if we forgo some short-term gains."

The Google IPO defined the last technology bull market. It was a mega-deal from the most important company of the time, and it made folks a lot of money. The stock went public at $85 per share on Aug. 19, 2004, and is now up 582% versus a 59% gain for the Nasdaq.

A lot of people credit that IPO with putting the sizzle back in technology stocks after the dot-com bust blew a hole through investor confidence. Many hope the Facebook IPO will pave a similar path for the market, but that remains to be seen.

Investor psychology, as a function of haphazard volatility and the sour social mood, may temper the effects of a successful Facebook IPO as it pertains to a broader stock market move. Through a pure supply-demand lens, the money chasing Facebook implies there will be less demand for other stocks.

As always, the reaction to this event will be more meaningful than the event itself. And while Facebook will certainly be one of the new four horsemen of technology - joining Apple, Google and Amazon - we would be wise not to put the cart before any one particular horse.


Todd Harrison is the author of "The Other Side of Wall Street" and the founder and CEO of Minyanville, an Emmy Award-winning financial media platform. Read him daily at www.minyanville.com.

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