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The leading social network company, Facebook, are aiming to go public in the first quarter of 2012 at an eye watering valuation of $100 billion. Facebook’s IPO is being described as the most eagerly anticipated stock debut ever.
The Palo Alto based company boasts 600 million users and is currently trading at a valuation of $80 billion (a figure based on current investment levels). However as the company surpasses the 500 investor threshold, their valuation is set to soar.
The IPO was reported by CNBC who say that it is likely to be triggered by what is known as the ‘500 rule’. This essentially states that once a private company has more than 500 investors, they must start to operate as a public company by releasing quarterly financial figures to the Securities and Exchange Commission.
Facebook has declined to comment regarding speculation over their IPO, but the Chief Operating Officer Sheryl Sandberg revealed during a conference last year that an IPO was “the next thing that happens” and it looked “Inevitable.”
As a company looks towards an IPO, especially one the size of Facebook, banks battle it out to direct the IPO. Goldman Sachs are currently in the driving seat thanks to their recent investment in the social networking company, but other big banks such as J.P Morgan and Morgan Stanley shouldn’t be ruled out.
There is certainly a degree of pressure for Facebook to go public, despite the perceived reluctance of CEO Mark Zuckerberg. If they do cross the 500 investor mark, they will have to start disclosing their financial information publicly. If they do, there are certainly benefits to be reaped.
However there is growing criticism towards the social network leader, as their business model comes into question as well as the actual operational aspects of Facebook. It has come under constant scrutiny over privacy, as recent as last week with the ‘Facial Recognition’ saga [See: Is Facebook’s Facial Recognition an Invasion of Privacy Too Far?]
If Facebook’s popularity dwindles, is a $100 billion valuation really truly reflective or could this be the clearest indication of a second .com bubble?