There’s no doubt that Facebook’s IPO is coming, but the exact timing of it is a little uncertain. Early speculations pinpointed the company to begin selling stock in May, but recent activities suggest that the sale could be delayed.

These actions including Facebook’s surprise decision to acquire Instagram for $1 billion and its $550 million patent transaction with Microsoft have required additional paperwork for the SEC, which could take time. Jolie O’Dell of VentureBeat also thinks that Facebook intentionally wants to hold off on going public due to the current volatile market for technology companies.

As a result, some analysts and investors are raising questions about Facebook as a public company. In fact, they’re particularly concerned with how Facebook and the market will react to each other.

Is Facebook ready to face the challenges of Wall Street? What do you think?

Vitaliy Katsenelson, the Chief Investment Officer at Investment Management Associates and author of The Little Book of Sideways Markets, spoke with WebProNews and indicated that Facebook’s IPO would bring challenges for both the social network and the market. For example, Facebook’s recent decision to purchase Instagram brought up several issues.

First of all, the purchase happened very quickly and was reportedly done without the much input from the company’s board. It also cost Facebook $1 billion, which is a considerable amount for a company who has a yearly revenue of $4 billion.

“The decision to buy them [Instagram] – that’s not an issue,” said Katsenelson. “It’s the paying $1 billion dollars for them.”

Katsenelson told us that the cost Facebook paid is staggering, since the company is not even profitable. Furthermore, the acquisition is primarily about software and not about bringing more users on board. He said Facebook used “inflated money” to buy Instagram.

Beyond Instagram, there are also concerns about Facebook’s valuation, as WebProNews previously reported. Numerous analysts, including Francis Gaskins of IPODesktop.com, believe Facebook’s $100 billion valuation is too high. When we spoke to him back in February, he told us that the company’s past quarter earnings were indicative of its future growth.

“[If] you look at what happened for December 2010, March, June, and September of 2011, oddly enough, what you will find is the operating earnings were flat,” said Gaskins. “The net after tax earnings were flat, and the margins – the profit margins – went down.”

“The credibility of management’s forecast is very, very important,” he added.

Katsenelson also believes Facebook’s valuation is “very high” especially when compared to a company such as Google. The search and advertising giant brings in $40 billion annually as opposed to Facebook’s $4 billion. In other words, Facebook has to grow 10 times in order for its investors to double their money.

Another concern that Facebook and shareholders will have to deal with once the company is public is Mark Zuckerberg. While the young CEO certainly deserves praise for building a social media empire, the very leadership skills that helped him get Facebook to this point could actually end up hurting the company in terms of the market.

Zuckerberg and Facebook are among a group of founders and companies that create a new model, which shifts the power from the shareholders to the founders. Facebook’s S-1 filing specifically states that Zuckerberg has the “ability to control the outcome of matters submitted to our stockholders for approval, including the election of our directors, as well as the overall management and direction of our company.”

Google also recently announced a stock split that will give its founders more power. Zynga and LinkedIn are included in this model as well.

Facebook’s Instagram purchase is one example of Zuckerberg demonstrating this power. He saw Instagram as an asset to his service and bought them.

“It seems he [Zuckerberg] just got a billion dollars and didn’t care to ask his board,” said Katsenelson.

This shift, however, is not likely to sit well with Wall Street. Katsenelson told us that the market expects checks and balances. In other words, if Facebook doesn’t deliver on its $100 billion valuation, it won’t matter how much power its CEO has.

Katsenelson predicts that Facebook will be oceanfront property when it first goes public. He believes it will drive a lot of excitement for its generational impact, which will make the masses want a piece of it.

“When you say the word ‘social network,’ the way we analyze the stock changes,” he said. “We become a lot more forgiving and a lot less critical.”

Unfortunately for Facebook, Katsenelson doesn’t believe this honeymoon phase will last too far beyond 6 months. He told us that the market would need to see increasing revenues and a CEO that is dedicated to profitability.

“After a while, investors are going to start looking at it… not as this kind of prized asset, but as a business where genuine cash flow is essential,” he said.

“I want him [Zuckerberg] to think about long term stability, and if he doesn’t, I would just run. I would not touch the stock.”

Do you agree with Katsenelson? Is Facebook and Zuckerberg in for a rude awakening once it hits the market? Why or why not?

Update: The Wall Street Journal, citing people close to the situation, is reporting that Facebook is planning to start its roadshow next week with the intention of holding its IPO on May 18.