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Facebook (FB) recently filed its long awaited S-1 and intends on going public in the next few months, allowing investors the opportunity to own one of the most life altering programs ever created.

Facebook has done more to usher in the social age than any single program in history of the world. At one time there was competition in the sector, Friendster and MySpace, but both have fallen victim to a website counting over 800 million profiles. Users gravitated to the simplistic design uploading photos, reconnecting with old friends, and opening up to the world.

With twelve month revenues totaling $3.71 billion and a valuation of more than $100 billion dollars, Facebook stock trades for 26.9 times sales; an astounding valuation for a company whose sales growth is only 88 percent per year.

There are some questions about the company that investors should consider. Of the 800 million users, how many are truly unique? There are many groups that are filled with commentary from people using obviously fake names, leading me to wonder about the number of unique users among the user base.

The unique user problem was highlighted by Google+ not allowing users to create fake profiles, although the practice has changed since then.

Another worry is the symbiotic relationship with Zynga (ZNGA), whose games account for 12% of total revenues. My biggest concern is that Facebook is not so much a social network but more of a gaming aggregator with a social network attached.

The question of how Facebook intends on monetizing its user base will now be answered in a public, rather than a private, forum by a market that is much less forgiving.

Advertising is one method but Facebook's search program needs an overhaul if it expects to compete for queries with the likes of Google (GOOG) and Bing (MSFT).

The rich valuation was set last year in a private market where uninformed investors auction bid on shares. It is unlikely that the investors bidding on the shares had access to information that was available in the recently released S-1 raising questions over the validity of the valuation.

For now, investors should sit on the sidelines and wait rather than chase the IPO in what will be a frenzied push leading up to the IPO date. Unless revenue growth can significantly accelerate, it is likely that the share price will wilt in its first year like many of 2011's social media's IPOs, namely Groupon (GRPN), Zynga, and Demand Media (DMD).

This is not to say that Facebook itself is a bad program, nor is this a knock against management, but at present valuations and concerns, little is left on the table for investors.

Source: Facebook IPO: Investors Should Wait