Facebook IPO: Buyer Beware

Facebook kicked off its road show Monday with CEO Mark Zuckerberg pitching the upcoming IPO to scores of investors.

But with the company set to fetch $96 billion when it hits the public markets next week, is the social media giant overhyped?

Alan Patricof, founder and managing director at Greycroft was an early investor in companies like AOL and Apple . And when it comes to the Facebook IPO, he tells us, “I’m very concerned by the public’s over exuberance.”

Patricof says that unlike most other companies, Facebook is so pervasive in people’s lives that they feel attached to the company. “The general public has been anticipating Facebook’s IPO for almost a year,” he reminds.

And he thinks that enthusiasm will likely drive the stock too far too fast. "I'm concerned about what the initial pop might be," he says, and then individuals will want to get in. It looks like Facebook will sell at 24 times revenue. By comparasion, Google sells at 5 or 6 times revenue.”

In fact, Patricof tells us he thinks Facebook would need a “cascade of miracles” to maintain the early pop that he’s expecting.

Ultimately he says the valuation will be tethered to how the June quarter goes - and if history is any guide Facebook may be facing headwinds. Profits dropped in the first 3 months of 2012.

“Everything would need to work right – revenue would have to grow at a high rate – and they would have to show an exponential growth rate that will be harder and harder to maintain."

All told, Patricof says buyer beware. “A lot of people could find themselves very disappointed.”

What do you think? We want to know!

Vote to see results
Total Votes:

Not a Scientific Survey. Results may not total 100% due to rounding.

Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment, but not have it published on our Web site, send those e-mails to fastmoney@cnbc.com.

Trader disclosure: On May 7, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Karen Finerman is long AAPL; Karen Finerman is short AAPL; Karen Finerman is long BAC; Karen Finerman is long JPM; Karen Finerman is long NFLX; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is long RIMM; Karen Finerman is long HPQ; Karen Finerman is long DIS; Karen Finerman is short SPY; Karen Finerman is short IWM; Karen Finerman is short MDX; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU; Steve Grasso is long ASTM; Steve Grasso is long AVAV; Steve Grasso is long BA; Steve Grasso is long D; Steve Grasso is long FRO; Steve Grasso is long LNG; Steve Grasso is long MHY; Steve Grasso is long NUAN; Steve Grasso is long MO; Jon Najarian is long MAKO; Jon Najarian is long RAX; Jon Najarian is long WYNN; Jon Najarian is long call spreads AAPL; Jon Najarian is long call spreads CIEN; Jon Najarian is long call spreads GS; Jon Najarian is long call spreads FFIV; Jon Najarian is long call spreads FIO; Jon Najarian is long call spreads NFLX; Jon Najarian is long call spreads AH; Jon Najarian is long call CIGX; Jon Najarian is long call CBOE; Jon Najarian is long call CME ; Jon Najarian is long call DDMG; Scott Nations is long SPY; Scott Nations is long C; Scott Nations is long BAC; Scott Nations is long HSII

CNBC.com with wires.