Kaminsky's Call: Does Facebook Need to Go Public?

When Russia’s largest internet group, Mail.ru, announced investors would have an opportunity to take an indirect stake in the social networking site, it begged the following question:


Does Facebook really need to go public?

Ten years ago, my answer may have been different. But for the time being, Facebook does not need to go public, and here's why.

One of the many reasons to go public is to create liquidity. Unlike a decade ago, there is a liquid secondary market where employees or early investors can cash out if that is their intention. If this was thought to be a reason why those inherently invested in Facebook would want to go public, it is not of the necessity by these terms.

Another question I have: Is Facebook even ready for such a public splash? They need to have a more visible revenue growth strategy in place before an IPO. What are the plans for advertising? How about for eventual subscription plans?

When Aryeh Bourkoff, UBS Vice Chairman of Telecom, Media & Technology Investment Banking, called in to the show yesterday, he echoed my sentiment. The only reason why Facebook would want to be publicly traded, he added, is if they want to effort other transactions.

First off, if they wanted to go this route, they could likely fund an acquisition with very attractive cheap debt now.

But, I have an inkling that Facebook CEO Mark Zuckerbergis not interested in these ventures at the moment. This could easily change should Facebook look to become the next Google, but for now, patterns indicate that Facebook may be looking to expand their business primarily through their current operations.

And if this should be the case, the stock could stay private as liquidity in the secondary market grows

Programming note: "The Strategy Session," hosted by David Faber and Gary Kaminsky, airs weekdays at Noon ET on CNBC.

Gary Kaminsky does not hold any equity positions.

The content of this blog is published in the United States of America and persons who access it agree to do so in accordance with applicable U.S. law.

All opinions expressed in this blog are solely the opinions of Gary Kaminsky and do not reflect the opinions of CNBC, NBC UNIVERSAL or their parent company or affiliates, and may have been previously disseminated on television, radio, internet or another medium. You should not treat any opinion expressed by Mr. Kaminsky as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Mr. Kaminsky’s opinions are based upon information he considers reliable, but neither CNBC nor its affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. Mr. Kaminsky, CNBC, its affiliates and/or subsidiaries are not under any obligation to update or correct any information provided on this website. Mr. Kaminsky’s statements and opinions are subject to change without notice. No part of Mr. Kaminsky’s compensation from CNBC is related to the specific opinions he expresses.

Past performance is not indicative of future results. Neither Mr. Kaminsky nor CNBC guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment discussed on this website or on the show. Strategies or investments discussed may fluctuate in price or value. Investors may get back less than invested. Investments or strategies mentioned on this website or on the show may not be suitable for you. This material does not take into account your particular investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. You must make an independent decision regarding investments or strategies mentioned on this website or on the show. Before acting on information on this website or on the show, you should consider whether it is suitable for your particular circumstances and strongly consider seeking advice from your own financial or investment adviser.