Facebook may be planning IPO in 2012
The stage is set for a Facebook initial public offering in 2012, according to financial information made available to potential investors.
The documents that surfaced this week show that Facebook expects to exceed 500 shareholders this year, which would cause it to begin making financial disclosures to the public by April 2012.
Exceeding that number of shareholders would trigger a Securities and Exchange Commission rule that requires that companies make routine filings even if they do not trade their shares publicly. Companies have 120 days after crossing that threshold to register as a reporting company. Most companies opt to go public when they are required to make these kinds of financial disclosures.
A Facebook spokesman declined to comment.
Speculating about when Facebook will tap the public markets has become a popular parlor game in Silicon Valley and on Wall Street since the red-hot social networking company launched a private offering of shares through Goldman Sachs this week. Goldman Sachs participated in a separate $450-million investment that valued Facebook at $50 billion.
Documents being circulated by Goldman Sachs to its wealthy clients provide scant detail on how Facebook makes money but do contain some financial details. For example, in the first nine months of 2010, Facebook brought in $355 million in net income on revenue of $1.2 billion.
Goldman clients have until Friday to commit to investing in Facebook. Goldman is raising at least $1.5 billion from its clients through the offering.
The frenzy for Facebook shares reflects rising investor demand for fast-growing Internet companies.
"If you are a company like Facebook, LinkedIn or Groupon -- a company that has actually established scale and profitability and is growing rapidly -- there is a ton of money available to you," said Ken Marlin, managing partner of Marlin & Associates, a New York boutique investment bank focused on media and technology.
-- Jessica Guynn