Facebook is rumored to file papers for an initial public offering (IPO) this week (possibly as soon as Wednesday), and the biggest question is of course: how much is the social networking giant really worth? For a while now, employees and early stakeholders have been able to sell shares privately on SecondMarket and SharesPost. The latest auction from the latter ends Thursday, and at a share price of $35.50, gives Facebook an implied valuation of $83.5 billion.
It's important to note that even if Facebook files for its IPO this week, we won't know the company's valuation until right before the offering, which typically occurs about three months later, which by the way lines up with timing stated by at least one rumor: May 2012. Nevertheless, investors are always eager to know what would happen if Facebook would go public right now. The SharesPost estimate is the closest we've got right now, but even it will change: private shares can still be traded on secondary markets after the filing, though of course Facebook will restrict transactions as the date of the public offering nears.
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 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?). That's just a nice round number though: the real valuation is unlikely to have the perfect 12 digits, but of course everyone wants to know how close it will be to it.
In short, the only official number we have is $50 billion. Investments have been made valuing the company at $70 billion while sales on secondary markets have priced it in the $80 billion range. The expected valuation is anywhere between $75 billion to $100 billion.
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