Buying shares in Facebook will not be worth the risk over the long term, according to David Lowery, equity strategist at Faraday Research.
Facebook plans to raise up to $12 billion in its initial public offering priced at between $28 and $35 a share, which would value the company at around $96 billion.
Facebook is starting its roadshow on Monday, and trading is expected to start on May 18.
“If I was an investor, personally [Facebook] isn’t something I’d be getting involved in. You’re taking a hell of a lot on trust, and it’s a pretty punchy valuation,” Lowery told “Squawk Box Europe.” “There’s a lot of hype out there and by the sounds of it, they’re pricing the IPO a bit lower just so they don’t suffer from a collapse on the first day of trading.”
He added: “There’s going to be so much demand for this short-term. It might go up, but in six months, I just don’t know.”
However, Rupert Goodwins, editor of ZDnet, takes a different view, and told CNBC that Facebook has a strong future ahead of it, at least for the next few years.
“There is a huge demand for Facebook shares. There is no doubt this is going to be a top end of the valuation or above success for them,” Goodwins said. “There will be no problem whatsoever in maintaining the share price over the next few years.”
Facebook’s IPO is also coming at just the right time for the markets, according to Goodwins.
“People are absolutely desperate for the tech market to take off,” he said. “There’s a lot of pent-up demand out, a lot of money waiting to be invested in something like this.”
CNBC Data Pages:
- Dow 30 Stocks—In Real Time
- Oil, Gold, Natural Gas Prices Now
- Where’s the US Dollar Today?
- Track Treasury Prices Here
Disclosure information was not available for David Lowery, Rupert Goodwins, or their employers.