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After halting secondary trading, Facebook IPO paperwork expected Wednesday
The world may soon get a peek at all the nitty gritty financials of Facebook -- perhaps even by Friday. Facebook may be filing for IPO as soon as Wednesday, according to the Wall Street Journal.
Sources close to Facebook are looking at a valuation between $75 billion and $100 billion as it raises up to $10 billion for a market debut.
Morgan Stanley and Goldman Sachs look to be involved in the significant undertaking in what would be the biggest Internet tech IPO since Google. This talk comes shortly after Facebook temporarily froze secondary trades on its shares -- which left people buzzing that an IPO filing would be right around the corner.
Facebook IPO timing has been debated widely since November as the time that Facebook would be able to keep financials under wraps came close to expiring -- CEO Mark Zuckerberg and COO Sheryl Sandberg avoided giving away the time table to go public but this week Sandberg shared a lot of the financial impact Facebook was having in the E.U. while she spoke at the DLD Conference in Munich.
The Menlo Park, Calif. social-networking company, which has more than 800 million members, will be make a huge splash on the IPO scene. I suspect that the IPO filing will also disclose that the site has reached a billion people (a number everyone has been waiting to hear as the social site grows at a rapid rate.)
Currently the largest U.S. Internet IPO was the $1.9 billion sale in 2004 by Google Inc. which valued Google at $23 billion.
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.
Many companies suspend secondary trading ahead of a filing to avoid any suspicion of insider trading or impropriety.
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 has geared up for IPO
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 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.
All of these resent moves have poised the company to strike the markets hot and fast -- and now we all wait to see what the real numbers and growth will show. I have my highlighter ready.
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