Facebook is planning an initial public offering (IPO) for this year – this we already know. The big question is still when, and the latest rumor suggests it could come in the third week of May, meaning the company will file its IPO documents this month or next, according to multiple sources cited by All Things D.
All this timing is still guesswork: even if this timeframe is accurate (it's the most specific one we've heard so far), anything can change in today's turbulent market, especially if questions from regulators press too hard. When it comes to the company going public, we've already heard it all: in Q1 2012, Q2 2012, or even later, depending on which rumor and sources you want to believe.
There are two leading contenders for the Facebook IPO: Goldman Sachs and Morgan Stanley. The former has a chance because it ran the social networking giant's private offering; although, some reports say the bank's relationship with Facebook has been frayed. Meanwhile, the latter has a chance because it was the leading participant in 2011 tech IPOs. Both have been consistently linked to the long-awaited transaction this year. Either way, Facebook CFO David Ebersman is said to the one leading the company's talks with Silicon Valley bankers about an IPO.
Facebook is projected to raise $10 billion, giving it a valuation of around $100 billion. If those end up being the numbers, the company will create more than 1,000 new millionaires (will your friend be one of them?).
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. He's worried, like many company founders before him, that he'll lose key employees working on various products to a simple obstacle that plagues everyone: greed. Some workers are supposedly keen to cash out in an IPO, but their boss wants to keep them around through next summer in order to complete certain feature rollouts. Facebook doesn't need to push for an IPO because it really doesn't need the money right now. The advantage of staying private is focus: you don't have to worry about investor phone calls or show up at investor conferences.
On the other hand, the company may be motivated to hurry up the process in order to increase employee compensation. In early 2010, Facebook put curbs on employees' ability to sell their company shares privately to other investors. To stop employees from quitting the social networking giant in order to monetize their shares, the company needs to go public so employees can sell their stock on the open market at various times during the year and cash in on their holdings. Furthermore, extra money wouldn't hurt: as competition with Google heats up, some extra fire power might be needed.
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- 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