Facebook IPO: Could Facebook be worth more than $100 billion?
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, according to a report from CNBC.
"Some of the private markets that track Facebook shares have an implied recent valuation of about $85 billion," CNBC reporter Kate Kelly said on the cable network Monday. "Now, up to you whether you put a lot of stock in that. These are fairly thinly traded markets, and let's remember that as recently as January when Goldman Sachs made a well publicized private investment in Facebook, it was valued at $50 billion.
"But 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."
Facebook officials declined to comment about the CNBC report, in which Kelly said on the air that a Facebook IPO could take place in the first quarter of 2012, "and we could see an S-1 [filing] as early as October or November this year."
The reason Facebook is finally considering going public with its company stock is that the social networking site -- which has more than 600 million users globally -- may have more than 500 private shareholders by the end of 2011, she said.
"Assuming they are on a fiscal calendar year," Kelly said of Facebook, "they will need to count their number of shareholders on Dec. 31, and if indeed it is more than 500, that will trigger reporting requirements with the SEC known as the '500 rule.' For short; they have until the end of April to disclose their financials.
"But they may just want to get ahead of that by doing a formal initial public offering, I'm told. And that could happen within the first quarter of the year. So, we've got a massive evaluation and a deal that could be coming within the next nine months or so."
Another reason Facebook may want to go public, the financial reporter said, is to keep employees happy.
"Employees of Facebook since last spring have not been permitted to sell their shares to other investors, except in perhaps in some limited circumstances," Kelly said. "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.
"Now, there may be some exceptions to that. The company has the right to buy shares back, for example. If you want to do a transaction, they have the right of first refusal. So there may be some opportunities. But really, an IPO would make it a lot easier for employees to monetize their shares."
-- Nathan Olivarez-Giles
Photo: Facebook CEO Mark Zuckerberg speaks at company headquarters in Palo Alto, Calif., in 2010. Credit: Robert Galbraith / Reuters