Could Facebook Reach $200 in 12 Months?

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Now that the long-awaited IPO is finally here, investor attention is turning toward the stock's rise or fall today and the record-breaking growth that may be in its future.
Will Facebook soar to Google's
GOOG
level? Or is the company more of a Netflix
NFLX
type of entity, one that will swim today and sink tomorrow? Anything is possible. But there are a number of reasons why the company
could
reach $200 by May 2013.
Hype for Every Milestone
In the past, Facebook did not make a huge deal about the company's every milestone. After reaching 500 million users, the social network began to minimize the hype for its user growth. Compared to other corporations, Facebook has also been somewhat quiet about the number of users who logon each day. That is going to change. Legally, Facebook is now obligated to report its financial results. But with investors watching its every move, the company will now want to tell the world every time a new milestone has been crossed. Whether it's the moment Facebook approaches its one billionth user (and the moment it actually crosses that mark), the millions of people who login to play a particular game, the rising number of status updates or links shared every hour, or some other achievement that the company can brag about, expect Facebook to report
every
milestone going forward. Those milestones could be the difference between success or failure, especially if the next quarter isn't everything shareholders want. By bragging about what the company has accomplished and could accomplish going forward, existing shareholders may be more inclined to stick around, while other investors may be more likely to dive in.
LinkedIn's Precedent
Never mind the fluctuating success of Zynga
ZNGA
and Groupon
GRPN
. When it comes to tech and social media IPOs, LinkedIn
LNKD
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may have set the precedent. Ahead of its IPO, LinkedIn was challenged by a number of skeptics who either ignored the firm's accomplishments or were fearful of what the company could do with its growing user base. These complaints have followed Facebook to its IPO and may carry over to Twitter if that network ever goes public. LinkedIn's skeptics were proven right when the stock dropped from more than $90 to roughly $63 in June 2011, the month following its IPO. They were proven wrong when the stock soared back to the $90 range a few weeks later. LinkedIn shares then climbed to nearly $110 and spent a couple weeks hovering in the $100 range. After that, the roller coaster continued: LinkedIn fell to $75, jumped back to $90, dropped to $71, rose to nearly $90 again, and so on. By November 2011, LinkedIn fell below $60 -- an all-time low for the social network. Today, the stock is trading over $100, but down roughly 2% from yesterday's close. What does this tell us? That no matter how many bad things people say about LinkedIn,
investors will still invest
. Facebook might have a roller coaster ahead of itself. But it will emerge victorious, if only for the foreseeable future.
Persistence Pays Off
They say that Facebook's growth is slowing. That was inevitable. You can't acquire 900 million users without reaching your limit. Unless Facebook plans to start cloning humans, there isn't much the company can do. Investors understand this -- even if analysts don't. But by
maintaining
its user base, investors will take notice. If Facebook crosses the one billion user mark this summer or fall and never gains another user, the company will still be able to say that it has a billion users! How many other companies can say that? If Facebook can keep those users, investors will respond accordingly.
Monetization Plans Are Coming
Up until now, Facebook didn't have any reason to tell us about its great ideas for monetizing 900 million people. Frankly, the company might not even have a plan to share. But now that Facebook's future is riding on its ability to make money, the social network will finally sit down and attempt to figure this out. None of the firm's monetization plans will come over night. It will be a while -- several months or more -- before we know how the company is going to make money. The current ad system isn't getting the job done. If Facebook can lose a major client like General Motors
GM
, you know there's a problem. But Facebook will continue to adjust and retool its ad process. As Facebook begins to share these details, investors will be more likely to take action.
Follow me @LouisBedigianBZ
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