Facebook is expected to have their initial public offering on May 17, but because they recently went on a shopping spree, acquiring Instagram for $1 billion, Tagtile – the customer-loyalty application,  and 650 Microsoft patents for $550 million, their IPO may be delayed by a month or so.

Facebook needs to discuss with the Securities and Exchange Commission the effect of their recent acquisitions.  A report from Reuters states that the SEC’s Corporate Finance division is reviewing Facebook’s IPO filing, and everything must be approved before Facebook can start selling shares.

“Any spending does make a difference to the financial position of the company, investors want to know what importance this is likely to have and make a decision”, Ian Maude of Enders Analysis said.

“[But] when you buy in you accept it’s become very big in a short space of time and its changing very quickly. You are buying into Zuckerberg and his vision for the business you have to make decisions on that.”

“The long term outlook for Facebook is still very good,” Maude added.

This delay would result in Facebook’s stock market debut in early or mid June, as the company do not want to launch during the Memorial Day holiday, May 28, when the market is less liquid and far less hospitable during that time, especially to newcomers.

Facebook’s value

The delay also opened the issue of Facebook’s valuation placed at $104 billion.  Some analysts stated that that projected valuation would defy any standard valuation metric.

“They’re putting out are very strong numbers, but they’re not quite living up to the discussion that have stratospheric valuations above $100 billion,” said  Max Wolff, chief economist and senior analyst at GreenCrest Capital.

The analyst also stated that Facebook’s recent quarterly report questions that valuation.  Facebook recently reported that their net income slid 12% to $205 million, while total sales fell 6% to $1.06 billion and costs rose 16% to $677 million in the first three months of the year.  The social networking giant also reported that advertising revenue fell roughly 8% last quarter to $872 million.  Eighty two percent of Facebook’s income comes from ad revenue.

Facebook aims to cater more major brands as they experiment with advertising models, but their financial report shows that pivoting could be costly.  Some have already decreased their Facebook valuation based on this latest financial report.

“It calls into question the scalability of the business,” said Brain Wieser, an analyst at Pivotal Research Group who lowered his valuation of Facebook on Tuesday to $75 billion from $82 billion. “Servicing large brands, which is Facebook’s growing focus, is very labor intensive.”