Once again, rumors are swirling around Facebook planning an initial public offering (IPO) for next year. The latest from people familiar with the matter cited by The Wall Street Journal, as reported by my colleague Larry Dignan, suggests the IPO will happen somewhere between April 2012 and June 2012. The company is supposedly already in discussions with the Securities and Exchange Commission (SEC).
If successful, Facebook would raise about $10 billion in its IPO, giving it a valuation of $100 billion. Don't look so surprised; this is not a new number: we heard it from the WSJ over six months ago.
The company has even prepared its own prospectus—a document filed with the SEC outlining the company's business. Facebook CFO David Ebersman is said to the one leading the company's talks with Silicon Valley bankers about an IPO.
The resurgence in talks about a Facebook IPO has many questioning whether this is the beginning or end for the company. Has Facebook peaked? I think we can speculate about this all day, and the reason is a typical dog-chasing-its-own-tail situation. We can't reach a conclusion about how Facebook will do when it goes public without seeing the company's financial numbers, and we can't see the company's financial numbers until Facebook goes public.
With the numbers we do have, however, I would argue that Facebook is growing, and impressively so. As of September 2011, Palo Alto had 800 million monthly active users, adding some 50 million in just two months. Furthermore, the service has 350 million monthly active mobile users, and the percentage of users who access the site from both desktop and mobile is quickly approaching the 50 percent mark. If the social networking giant plays its cards right, it should be able to avoid hitting a flat line for a little while longer.
Facebook co-founder and CEO Mark Zuckerberg has frequently stated, both publicly and privately, that he is against the idea of rushing the company into an IPO. Even earlier this month, Zuckerberg said there is still no expected timeframe for his company's IPO. On the other hand, a recent rumor suggested the company will make its S1 filing as soon as next month. Most expect the company to go public next year, possibly as soon as Q1 2012 (conflicting rumors argue there will be a delay).
In December 2010, Facebook announced that it had raised $1.5 billion at a valuation of approximately $50 billion, but that it had no immediate plans for the funds and would simply continue to build and expand its operations. The transaction consisted of two parts: in January 2011, Goldman Sachs completed an oversubscribed offering to its non-US clients in a fund that invested $1 billion in Facebook Class A common stock, while in December 2010, Digital Sky Technologies, The Goldman Sachs Group, and funds managed by Goldman Sachs, invested $500 million in Facebook Class A common stock at the same valuation.
Facebook's valuation has been all over the place in the months following the investment at $50 billion. Investments have been made valuing the company at $70 billion while sales on secondary markets have priced it at $80 billion. Some look at the growth and see great prospects. Others see a dip in the last few months and think Facebook is doomed. The truth is we can only make predictions on the little data we have, and the rumors are going to just keep coming.
- Facebook to double revenue to $4.27 billion, 89% is from ads
- Facebook's revenue doubles to $1.6 billion (report)
- Facebook may have missed revenue projections by $500 million
- Facebook made $1.86 billion from your content in 2010
- Facebook: advertising rates staying constant even as inventory rises
- WSJ: Facebook growth exceeds expectations, $100 billion valuation justifiable