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Facebook to halt secondary market trading for the week

Talks that Facebook secondary stock is on hold brightens the buzz about upcoming IPO

Technology trends and news by Krystal Peak
January 25, 2012
Short URL: http://vator.tv/n/23d5

Another indicator that a Facebook IPO filing could be just around the corner has popped up. A three-day suspension on trading Facebook stock on the secondary market is being reported by Bloomberg. 

Even though Facebook is not a publicly traded stock, there are shares for the social networking giant on the secondary market and reports are trickling out that there is a halt on that trading for the remainder of the week.

While buy and sell orders can be made, transactions won’t be processed by Facebook’s attorneys at Fenwick & West LLC.

Many have been anticipating that Facebook is about to file for a $10 billion IPO that would value the company at more than $100 billion and that it would hit the markets some time this spring. 

Many companies suspend secondary trading ahead of a filing to avoid any suspicion of insider trading or impropriety. 

Could this mean we would see an IPO filing on Friday? It's all in the realm of possibility. 

Facebook has been very busy the last few months, launching new application platforms, revenue stream and partnering with some big names. I think all of this is in order to bring Facebook buzz to a near-crescendo as it files its IPO.

How Facebook is gearing up

The near constant roll-outs of new products and announcements has been since reports of IPO filing came in November. 

Facebook has remained tight-lipped about when it will go public but the rumor mills are gaining fodder that the announcement and filing with the SEC could come before the close of the year.

While filing for an IPO is not always the route that large companies wish to move toward, Facebook will have to start disclosing its revenue when it crosses the 500 shareholder threshold, set by the SEC, and most suspect that the company will go public upon that benchmark.

With more than 800 million users and a slew of advertisers and developers that pay for access to create applications and services on the site, Facebook has created a business model that many are ready to bet on.

Then in late November, some rumors started circulating that Facebook was in talks to get into the online gambling business -- at least in the UK.

The timeline for such an endeavor is unknown as of yet, but the company has been in talks about ways to translate the social gaming and credit system into a real money maker.

The Facebook credit system currently cuts itself a 30% slice of the virtual token revenue from social gaming. But a real money version would leave many questioning if that would impact the credit system and how people would "cash out" winning.

The talks appear to only be a UK project since many states in the US bar gambling and the logistics of offering such a service on a state-by-state-basis seems highly unlikely.

The current frontrunner on the Facebook gaming segment is the IPO-hungry Zynga, with 30+ million monthly users -- roughly 6% of the social network population. Facebook might be in search of alternative revenue models as Zynga launches, its once Facebook-exclusive, games on its own website and other platforms like the quickly-growing Google+ (with 40+ million in the population and counting.)

Then there are all the updates we have seen to the revenue options for advertising and "featured stories" that help keep faith up that Facebook can maintain a stronghold on advertisers and their dollars.

And in recent weeks we have seen Open Graph and Timeline become bigger parts of the "new face of Facebook."

And this week the company COO Sheryl Sandberg was at the DLD Conference in Munich touting the global (especially European) strength that Facebook has grown. 

In the past year, Facebook has added $15.3 billion in value to the European economy, Sandberg shared. Businesses and governements are able to market, share, sell and gain perspective on Facebook and other social media, which has been highly lucrative for those that made the technology a part of their business plan.

Facebook is also setting up a small business marketing campaign where it will give 100€ in credits to 50,000 businesses for marketing on the site. The social network will work with local partners to dole out the credits to these small businesses.

This all seems to add up to a company poised to strike the markets hot and fast. I wouldn't even doubt that in tamdem with the IPO filing, if Facebook announces that it has reached its one billion user mark -- that would be a fitting way to celebrate.

We will all have to see if this is the time or if secondary suspension will just be a first move in a longer list of moves as Facebook prepares for IPO.

 


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