IPO For Facebook Targets $100 Billion

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With over 800 million users worldwide, Facebook’s growth has skyrocketed over the past seven years. (Image: Svilen Milev)
With over 800 million users worldwide, Facebook’s growth has skyrocketed over the past seven years. (Image: Svilen Milev)

FINANCE

  • IPO to raise $10 billion at value of $100 billion
  • 2011 first-half revenues double 2010 figures
  • Will soon exceed 500-shareholder limit, be obliged to publish financial results

Facebook is preparing an initial public offering in the second quarter of 2012, according to the latest reports. The public offering is expected to raise $10 billion, with the company setting its sights on a $100 billion total for the deal, sources close to the matter told the Wall Street Journal.

Such a deal would eclipse other recent IPOs in the social media sector, such as those from LinkedIn, Pandora or Groupon, and would be twice the valuation of IT company Hewlett-Packard.

Social network game developer Zynga is also expected to go public within the coming weeks, after releasing an IPO of up to $1 billion. Company CFO David Ebersman has already engaged in IPO talks with financial institutions, though chief executive Mark Zuckerberg is yet to confirm terms or dates.

With over 800 million users worldwide, Facebook’s growth has skyrocketed over the past seven years. But the company has still not made any move to appoint managers to oversee the highly anticipated floating.

A document has been drafted internally and is ready for publishing at the drop of a hat whenever the IPO is given the green light, according to WSJ.

Earlier in the month, PBS aired an interview in which Zuckerberg explained his position on going public, repeating once again that he was in no rush. “We’ve made this implicit promise to our investors and to our employees that by compensating them with equity, at some point we’re going to make that equity worth something publicly and liquidly,” Zuckerberg said.

“The promise isn’t that we’re going to do it on any kind of short-term time horizon. The promise is that we’re going to build this company so that it’s great over the long term.”

Shareholder Limit

Stock options handed out as staff and investor incentives are set to push the company’s total number of shareholders to over 500 before the end of the year. This is the limit imposed by the United States Securities and Exchange Commission before companies must disclose financial information.

This would not in itself oblige Facebook to go public, but it is nonetheless expected to do so before it has to publish its financials at end April 2012. While Facebook does not release quarterly results, Reuters reported that revenue from the first half of 2011 was up to $1.6 billion, double the amount from the same period last year.

Facebook has recently had to answer to the Federal Trade Commission over claims it violated users’ privacy through unannounced modifications of privacy settings on its website in 2009.

The FTC has proposed a 20-year settlement under which the social networking giant would have to obtain express permission from members before sharing their information, as well as allowing an independent investigator to conduct an annual privacy practice review.

Key Statistics – Facebook

  • Facebook has over 800 million users.
  • More than 35% of users are over the age of 35.
  • Every 20 minutes, over 10 million comments are made and around 1 million links shared on Facebook.
  • The United States accounts for more than 71% of Facebook users.

By James Mulholland for
James Mulholland is a Paris-based internet and broadcast journalist specializing in sports, current affairs and technology news, while also freelancing as a photographer.

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