Facebook’s highly anticipated launch as a publicly traded company could happen within days.
In what would be the most hotly anticipated consumer technology offering for more than a decade, Facebook could start the process for an initial public offering of stock as early as Wednesday.
The social networking site – which is expected to hit one billion users this year – would join McDonald’s, Amazon.com, Visa and Bank of America Corp in the top ranks of the largest public companies in the world.
Already a billionaire on paper, Mark Zuckerberg could cash in a fortune on the open market as soon as Wednesday as Facebook is set to IPO with a value of $75-$100 billion
The sale could raise as much as $10 billion (£6.4 billion) in an offering that would value the company at $75 billion to $100 billion (£48 billion to £64 billion), according to the Wall Street Journal.
The windfall would dwarf the $1.67 billion (£1 billion) raised in Google’s 2004 float. That offering gave Google a market value of $23 billion (£15 billion) – but the company is now worth $184 billion (£117 billion).
CEO and founder Mark Zuckerberg, 27, is already considered a billionaire because of shares traded on a closed market.
The sale could be a boon for Facebook’s employees too – Mr Zuckerberg suggested in an interview last year that if his company went public it would be possible to reward staff with ‘equity and options’. Up to one third of Facebook’s 3,000 staff could become millionaires.
Dustin Moskovitz: The co-founder’s company share of 6% would be boosted to an estimated $6 billion at the aimed $100 billion company value
Eduardo Saverin: The co-founder recently sold most of his 5% company stake which would have garnished him an approximated $5 billion value
However a public listing would also mean Facebook would have to answer to the demands of investors hungry for a profit.
And buyers will need deep pockets, with speculation that each single share will be offered at between $38 and $40 (about £24.20 to £25.40).
Facebook spokesman Larry Wu said the company will not comment on IPO-related speculation.
After filing initial paperwork, shares would normally start trading in around three to four months.
Chris Hughes: The co-founder and original spokesperson of Facebook owns less than 1 per cent of the company equating to less than $1 billion if the company reaches its desired value
Sean Parker: The Napster co-founder and Facebook founding president owns 4 percent of Facebook, approximated to hit $4 billion if the company’s value inclines as proposed
FACEBOOK CO-FOUNDERS’ WORTH
Dustin Moskovitz:Age: 27Net worth: $3.5 billion
Net worth: $17.5 billion (£11 billion)
Owns 24% of Facebook, previously worth $5.3 billion(£3.4 billion)
ROLE: Founder and Chief Executive Officer of Facebook
Currently creating his own monetary system ‘Facebook Credits’ to facilitate transactions and profits, according to Forbes.
(£2.2 billion)Holds a 6% stake in Facebook previously worth $1.3 billion
(£827 million)ROLE: A co-founder and the social-networking site’s first chief technology officer, Moskovitz left in 2008 and started Asana, a software company that allows individuals and small companies to better collaborate.
Eduardo Saverin:Age: 29Net worth: $2 billionMost recently held a 5% stake in Facebook, previously worth $1.1 billion (£700 million), which he has since sold more than half of to invest in new start-ups
.ROLE: Co-founder of Facebook
Chris Hughes:Age: 28Net worth: estimated at $700 million
(£445 million)ROLE: Co-founder & original Facebook spokesperson. Most recently served as Barack Obama’s Director of online Organizing for his 2008 presidential campaign. Currently the executive director of a new social network called Jumo which connects individuals to global nonprofits.
Sean Parker:Age: 31Net worth: $2.1 billion (£1.3 billion)
Owns 4 percent of Facebook, worth over $880 million
(£560 million)ROLE: Former Facebook president, helped capture initial investors for the company
Winklevoss twins:Age: 30Net worth: They accepted a $20 million (£12.7 million) cash settlement and Facebook stock that could now be worth more than $150 million (£95 million), according to AdWeek
.ROLE: Claimed they invented Facebook which was stolen by Mr Zuckerberg
For the state of California it can’t come soon enough. The fiscally challenged state expects a tax windfall after the IPO.
In 2006, two years after Google went public, 16 Google insiders paid the state $380million (£242 million) in taxes after cashing in 9 million shares – enough to cover the salaries of more than 3,000 state workers.
When a company goes public stockholders can’t sell the shares right away, so takes a little while for the tax income to flow in.
The main reason for an IPO is to produce a profit for the company, adding to Mr Zuckerberg’s already estimated net worth of $17.5 billion (£11 billion) with the expected sale of the company’s securities.
At $100 billion (£63.6 billion) valuation, the company started by Zuckerberg in a Harvard dorm room would have double the valuation of Hewlett-Packard, the Journal said.
Facebook’s IPO would dwarf that of any other dotcom waiting to go public.
‘Farmville’ creator Zynga has filed for an IPO of up to $1 billion (£636 million). In November, daily deals service Groupon debuted with much fanfare, only to plunge below its IPO price within weeks.
LinkedIn and Pandora are now also trading significantly below the levels their stocks reached during their public debuts earlier this year.
Facebook has become one of the world’s most popular Web destinations, challenging established companies such as Google Inc and Yahoo Inc for consumers’ online time and for advertising dollars.
Facebook does not disclose its financial results, but a source familiar with the situation told Reuters earlier this year that the company’s revenue in the first six months of 2011 doubled year-on-year to $1.6 billion (£1 billion).
Eric Feng, a former partner at venture capital firm Kleiner Perkins Caufield & Byers who now runs social-networking site Erly.com, said that the cash Facebook will get in an IPO would allow them to make more acquisitions and refine or work on new projects, such as a rumored-Facebook phone or a netbook.
Having tradeable stock will also allow Facebook to attract more engineering talent who might have been more attracted to the company in earlier days when it was growing faster but now perhaps might be attracted to other companies.
‘It’ll be a powerful bullet for them,’ said Feng.
Investors have been increasingly eager to buy shares of Facebook and other fast-growing but privately-held Internet social networking companies on special, secondary-market exchanges.
Facebook said last January that it will exceed 500 shareholders in 2011, and that in accordance with SEC regulations, it will file public financial reports no later than April 30, 2012.
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