Unless you have spent the last few months hiding out in some sort of sensory deprivation chamber, you know that this week will see the long anticipated IPO of everyone’s favorite social network.  Facebook is expected to start trading with the very healthy market cap of something close to $100 billion.

At that valuation, FB will be worth roughly half of Google (and Walmart for that matter) and will be equal to the market value of Amazon.  In the trailing twelve-month period Google had nearly $40 billion in revenue and Amazon just over $50 billion.  Facebook generated $3.7 billion in revenue in 2011.  It is safe to say a $100 billion valuation indicates tremendous amount on confidence in the FB management team to leverage and monetize all of that personal data the platform clearly generates on a daily basis.

Interesting timing that GM chose this week to announce that they were not longer planning on advertising on FB as “GM’s marketing executives decided Facebook’s ads had little impact on consumers and it was not getting any discernible benefit from the spending.”  The challenge is that according to Forrester analyst Nate Elliot, GM is one of a growing list of large brands that find FB lacking as a marketing platform.  And according to some, that dynamic is actually getting worse, not better.

There is no doubt that FB can play a valuable and (for now) unique role in the overall marketing plans of a company.  However, if a stock valuation were to be tied only to the ability to generate value (and thus revenue) that FB has either demonstrated or clearly identified for future exploration, you would be hard pressed to support a valuation of anything north of $15-25 billion, and you could argue that even that would be a stretch.

Mark Zuckerberg, Founder and CEO, Facebook

Zuckerberg and crew will have a very challenging time figuring out how to monetize user data with out constantly running head first into privacy issues.  A number of the steps they have taken to change or loosen the privacy policy over the last two years have been met with immediate and overwhelming resistance and has ultimately resulted in a retreat by FB.  This dynamic is not going to change and, ironically, due to the wonders living in the new world of Social Media where hundreds of thousands of dissenters can be mobilized in a matter of hours, it will only get worse for FB.

The Facebook IPO will probably do well in the near term.  Long term, I believe there are far too many issues and unanswered questions to support anything near a $100 billion valuation.