Facebook IPO: How Cramer's Playing It

Anticipation is mounting for a possible Facebook IPO on Wednesday, as the social media giant is reportedly flirting with a $75 billion to $100 billion valuation, making it easily the biggest tech initial public offering in history.

Mark Zuckerberg
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Mark Zuckerberg

If the Menlo Park, Calif.-based company does, in fact, go public at $70 billion, "Mad Money" host Jim Cramer will recommend investors buy it. If it’s priced at $110 billion, however, he doesn’t think it will make that much money. In that scenario, he thinks investors should blow out of it as quickly as possible.

To Cramer, the Internet company is deserving of a sizable valuation, so he recommends ignoring those who question it.

“With 800 million users, a fantastic business model and tons of revenue, Facebook deserves to have a gigantic valuation,” Cramer said. “It’s growing really fast and making a ton of money. So don’t be thrown off the scent of what could be a real homerun.”

News of the possible Facebook IPO was first reported by "The Wall Street Journal" on Friday, which cited unidentified sources. Morgan Stanley is a strong front-runner to be the lead underwriter, the newspaper cited its sources as saying. Goldman Sachs is expected to play a significant role in the deal too, it added.

A Facebook spokesman declined to comment.

The impending Facebook IPO — expected to raise $10 billion — is a prized trophy for investment banks, setting up a fierce competition on Wall Street, particularly between the presumed front-runners Morgan Stanley and Goldman Sachs.

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—Reuters contributed to this report

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