text: * May 7 roadshow means stock may debut May 18 -source 
   
   * Zuckerberg to be involved in roadshow -source 
   
   * Regulatory review of Facebook IPO near completion -source 
   
   By Alistair Barr and Alexei Oreskovic 
   
   SAN FRANCISCO, May 1 (Reuters) - The roadshow for Facebook Inc's initial public offering is scheduled to start on Monday, meaning the company's shares should begin trading on May 18, a source familiar with the process said on Tuesday. 
   
   Founder and CEO Mark Zuckerberg, who has mostly operated in the background during Facebook's closely watched journey to public markets, will be involved in the roadshow, another source said. 
   
   Facebook declined to comment. 
   
   Many on Wall Street had not expected Zuckerberg to turn up on the roadshow after he skipped a March analysts' meeting, ceding the stage to COO Sheryl Sandberg and CFO David Ebersman. His March absence irked some investors who were indignant that the CEO, while wielding near-absolute control over the eight-year-old firm, had snubbed Wall Street. 
   
   IPO roadshows, in which company management presents its strategy to prospective investors, typically last one to two weeks. If the roadshow goes particularly well, shares sometimes start trading a few days earlier. 
   
   Facebook is set to raise at least $5 billion in what will likely be the largest Silicon Valley IPO ever. The world's largest social network continues to command keen investor interest although disappointing first-quarter results raised questions about whether it can sustain breakneck growth for the longer term. 
   
   A source familiar with the offering said last week that a recent acquisition spurt by the company could have added about a week to the IPO timetable as regulators signed off on the deals. 
   
   This review is close to completion, however, allowing the company to go ahead with the roadshow on May 7, according to the source who spoke with Reuters on Tuesday. The sources did not want to be identified because they are not authorized to speak about the company's IPO. 
   
   "I have not seen as broad-based interest in an IPO since Google. Investor demand is immense," said Scott Sweet of research firm IPO Boutique. "I expect a roadshow that will rival all roadshows where investors will be turned away at the door." 
   
   The news on the road show was first reported by tech blog AllThingsDigital and the Wall Street Journal. ||||| This afternoon, rumors began to circulate that Facebook may begin its IPO roadshow as early as Monday of next week. Given the update to the S-1 released last week with slowing metrics and its recent acquisition of Instagram, one wonders, why is Facebook going public now? Should investors be worried? 
   
   I wrote about Facebook in March, citing its accelerating revenues, earnings and membership growth. At that time, growth remained strong and margins were intact. Gross margin was improving and operating margin appeared to be inline. The financials reflected the strength of Facebook’s unique position in the world of a destination where people wanted to go every day and provide all the data about themselves that marketers cared to learn. 
   
   Last week, Facebook updated its registration statement with first quarter results showing decelerating growth. To be fair, Facebook’s growth had already slowed year-over-year from 154% to 2010 to 88% in 2011. Yet, from Q1 2011 to Q1 2012, revenue growth was 45%, a more substantial deceleration than one would expect. 
   
   Slowing user growth is okay IF you can earn more money from your users; however the trends are going in the opposite direction for Facebook. Margins have come under pressure. All costs have increased, with cost of revenues up nearly 300 basis points, and operating income margin dropping from 52% to 47% for the full years of 2010 to 2011. But the drop in operating margin from Q1 2011 to Q1 2012 is more staggering: from 53% to 36%. This is concerning because the end result is that EPS to shareholders, that is investors, is dropping. 
   
   That trend could continue. Facebook earns over 80% of revenues from ads. Yet an increasing number of users are accessing Facebook from mobile devices and Facebook (not unlike the rest of the world) has not figured out how to deliver ads effectively to mobile devices. It’s a double-edged sword: If Facebook doesn’t deliver to mobile devices, some other company will topple its social dominance. If Facebook dominates the mobile arena, it cannibalizes its own ability to earn ad revenues without an obvious revenue-generating replacement. 
   
   Another area that may give investors pause is the Instagram transaction, both in process and in valuation. According to many reports, Mark Zuckerberg decided to do the transaction, negotiated the transaction and informed the board of his transaction. One of the risk factors cited in Facebook’s registration statement is Zuckerberg’s control of Facebook. If the reporting is true or close to it, then this is an example of the shareholders being subject to Zuckerberg’s decisions. This is not to say it wasn’t a good decision or direction, it is to say that the normal checks and balances that a board has over senior management may not be very strong here. 
   
   The second question is the valuation placed on Instagram. It is also noted that Instagram was days away from closing on a funding round valuing the company at $500M. Zuckerbeg paid twice that, based on a valuation of Facebook stock of $77B. Yet Facebook was “trading” at just over $100B on the secondary sites at the time, so he may have paid an even higher valuation. Why does someone pay twice the current “market” valuation? Presumably, it is because he needs the asset. Instagram has had stunning success on a purely mobile platform and Facebook needed a more robust mobile strategy. Should investors be alarmed that Facebook did not see this coming and develop the capability itself, or view it as a tremendously swift strategic move? 
   
   As an investor who likes the Facebook story, I would prefer Facebook to post another quarter in order to reverse its margin compression and to prove its ability to leverage the Instagram transaction into a revenue-generating mobile strategy. To date, mobile has been a double-edged sword for Facebook. Prudence would suggest delaying the IPO one quarter and prove a stronger model. Going public now raises the question: is this as good as it gets? ||||| Dow Jones Reprints: This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, use the Order Reprints tool at the bottom of any article or visit www.djreprints.com
target: – Facebook plans to begin a roadshow to pitch its stock to investors on Monday, clearing the way for an initial public offering on May 18, sources tell the Wall Street Journal. Mark Zuckerberg plans to appear at some meetings but other top Facebook execs will be handling most of the roadshow, the sources say. The closely-watched IPO is expected to value Facebook at up to $100 billion and raise up to $10 billion, making it the biggest in Silicon Valley history. "I have not seen as broad-based interest in an IPO since Google. Investor demand is immense," an analyst at research firm IPO Boutique tells Reuters. "I expect a roadshow that will rival all roadshows where investors will be turned away at the door." But the timing has mystified some analysts, including Darcy Travlos at Forbes, who believes Facebook should wait a few months to show investors that slowing revenue growth can be turned around and the company's $1 billion acquisition of Instagram was a wise move. "Going public now raises the question: Is this as good as it gets?" she notes.