OUTSIDE Facebook's vast new headquarters in Silicon Valley is a huge sign with an image of a hand on it giving a thumbs-up sign. A tiny digital version of the same hand sits on millions of websites and invites Facebook's 900m or so users to click on it to share content they have found with their pals. Now Facebook is hoping to get another big thumbs-up when it stages its eagerly awaited initial public offering (IPO) of 12% of its equity on America's NASDAQ stockmarket on May 18th. Assuming all goes according to plan, the flotation will be the largest yet undertaken by an internet company.

On a roadshow across America to promote the listing this week, Mark Zuckerberg, Facebook's 27-year-old boss, and other executives were treated like rock stars. Long queues snaked out of hotels where they were holding meetings, as investors lined up to hang on their every word. Hordes of photographers rushed to take pictures of Mr Zuckerberg, in his trademark hoodie, as he and his colleagues were whisked off to waiting limousines.

This frenzy is further proof, if any were needed, that Facebook has become a global internet idol. Facebulls reckon the flotation, which could raise almost $12 billion (with about half going to shareholders selling up), will help transform the social network into a web powerhouse in the same way that Google used the riches from its 2004 IPO to spread its tentacles across the web. And they confidently predict that Facebook's shares will start trading well above the range of $28-35 that the firm has set for them—a range that would value Facebook at $77 billion-96 billion. (Editors Update (06:55 GMT on May 15th): According to press reports, Facebook has increased the price range to $34 to $38 a share. At the upper end of that range the company would be worth $104 billion.)

Some financiers think it could command an even bigger price. If Facebook's valuation were to hit $100 billion, it would put the company roughly on a par with, say, Amazon and give it a market capitalisation greater than those of Dell and Hewlett-Packard combined. One analyst even dismissed Facebook's suggested pricing as “pretty silly”, pointing out that its shares were changing hands at $44 on at least one secondary market before trading in them was suspended ahead of the IPO.

However, there are good reasons for caution. Several high-profile internet firms that went public last year, including Zynga, a social-gaming company, and Groupon, a coupon-peddler, have seen their shares fall below their IPO prices and stay there (see chart 1). Even seasoned investors find it hard to resist a lemming-like rush to grab stakes in high-profile web firms. “When it comes to consumer-internet companies, enthusiasm often overwhelms pragmatism on offering day,” notes Lise Buyer of Class V Group, an IPO advisory firm. Facebook is admittedly in a different league to the likes of Zynga and Groupon. Its size gives it access to mountains of data and to economies of scale that others cannot match. It can also tap into a wide range of moneymaking opportunities. Last year the company made most of its $3.7 billion of revenue from online display advertising. But it also takes a slice of the sales of digital tractors, swords and other virtual goods in games run by Zynga and others that use Facebook's platform to reach customers. This business generated $557m for the social network last year. Such sums of money are impressive given that Facebook was only launched in the same year that Google went public. But the network's rise also raises several important questions that investors would do well to ponder. The first of these is whether Facebook can become a part of the fabric of a more social web, rather than simply a destination on it. Within five years, Mr Zuckerberg sees all kinds of applications being linked to Facebook in one way or another. But to achieve this goal, the network must convince users to stick with it. The brief history of social networking is littered with examples of former high-flyers, such as Friendster and MySpace, whose fortunes faded after users dumped them in droves when they were no longer considered cool—even though this meant abandoning the content they had built up there. Alert to this risk, Facebook has been rolling out new features such as Timeline, which encourages users to load their life histories onto the social network, to bind them in more tightly. So far, this approach appears to be working. Facebook trumpets that it had 901m average monthly users in the first quarter of 2012. And 526m, or 58% of them, used the service daily in March, up from 55% last year. This matters not least because frequent users are the most likely to click on ads and to splash out on virtual crops and other gaming paraphernalia.

Next there is the question of whether Facebook can adapt fast enough to the brave new world of mobile computing. The jury is still out on this. The firm has almost 500m mobile users, but its mobile apps are clunky and reflect the fact that its roots lie in the personal-computer era. To help cure this weakness, Facebook recently splashed out $1 billion on Instagram, a fast-growing mobile photo-sharing service, and it may use some of its post-IPO riches to snap up other mobile outfits. But until it can develop a more robust mobile platform of its own, it is likely to remain vulnerable to a disruptive challenger.

Facebook has little advertising on its mobile site, so its revenues could be hit if many more people access it on their phones. Investors will thus need to ponder whether its mainly computer-based ad business justifies such a lofty valuation.

On targeting

Facebook fans among admen rave about the network's ability to deliver a vast audience and to aim ads at specific groups of people using its mountain of data on them. “Facebook is probably the single most powerful platform out there right now for targeting consumers,” says Dick Reed of Just Media, a media-planning agency.

Perhaps, but the company has yet to demonstrate it can translate this power into a bold new social-advertising model. In recent months, Facebook has expanded one of its innovative ad formats, “sponsored stories”, which allows brands to pump puff-pieces into the “news feeds” of the brands' Facebook fans and their friends. Yet when it surveyed 21 executives in America who were running ads on Facebook, ITG Investment Research found that almost half had no intention of increasing their spending on it this year.

Steve Weinstein of ITG says that many advertisers still prefer to place traditional direct-response ads on the network, even though Facebookers generally are too busy chatting to their friends to click on these. Perhaps Facebook needs to work harder to educate advertisers about how best to use its platform. It will also need to find ways to aim its ads even more effectively without irritating or creeping-out its users, who have grown wary of its intentions after various privacy debacles.