Facebook IPO: Could Valuation Top $100 Billion?

CNBC reports that Facebook is likely to go public by the first quarter of 2012 at a valuation of $100 billion.

CNBC reportes, Facebook is considering filing for an initial public offering this fall that could value the world's largest social network at more than $100 billion. Photo: Franco Bouly/Flickr

Facebook, the social-networking site, one of the most closely-watched private companies in the world, is likely to go public by the first quarter of 2012, reports CNBC. Shares of the world’s largest social network will be offered based on a valuation of approximately $100 billion.

The company’s IPO would be probably triggered by a section of the 1934 Securities and Exchange Act known as “the 500 rule”. In brief, the rule mandates that once a private company has more than 500 investors, it must begin releasing quarterly financial information to the Securities and Exchange Commission, as public companies do.

Another aspect that motivates the likely new issue is the desire to increase employee compensation. Last year, Facebook put curbs on employees’ ability to sell their company shares privately to other investors—a move that may now be prompting employees to quit Facebook in order to monetize their shares.

Kate Kelly, CNBC reporter, says: “Employees of Facebook since last spring have not been permitted to sell their shares to other investors, except in perhaps in some limited circumstances. But its become very difficult for them to do that, so there’s almost a perverse incentive, I’m told, for people to leave Facebook so they can cash out their equity”.

Speaking of Facebook users, there aren’t as many new ones as there used to be. Inside Facebook has published a report showing that while Facebook membership continues to grow worldwide, “overall growth is lower than normal for the second month straight.”

Facebook spokesman refused to comment on the timing and details of an IPO. But at a conference  last month, chief operating officer Sheryl Sandberg called a Facebook IPO “inevitable,” describing it as “the next thing that happens.”

In case Facebook is valued at $100 billion, the company will become one of the biggest companies in the technology industry. Apple, the top company in the market, is currently valued at more than $300 billion.

Microsoft’s market capitalization stands at nearly $203 billion, Google – $162 billion. At $100 billion, Facebook would be worth more than many other popular firms, including Cisco, Hewlett-Packard, Canon.

What concerns the worth of the company, it is valued differently.CNBC reporter Kate Kelly says: “People who are on Wall Street and tend to track in this information tell me they think the IPO, if and when it happens, could value the company at north of a shocking $100-billion dollars.”

In January, when Goldman Sachs and other private investors put $1.5 billion into Facebook, the company was valued at $50 billion. “Some of the private markets that track Facebook shares have an implied recent valuation of about $85 billion,” reportes Kate Kelly.

Facebook declined to comment rumors, but CNBC reporter Kate Kelly points out that reps for the company have already called an IPO  “inevitable”. [via LA Times, CNET and CNBC]

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