Facebook is the largest social network in the world, with close to 800 million users. It is expected to hit 1 billion users before the end of 2012. Rumors of a Facebook IPO have been circulating since a couple of years now. We know that it will be probably going public around mid-2012, forced by SEC regulations to disclose its financials. According a new report by AllThingsD, Facebook will be likely going public in May.
It may have to file its S-1 documents in February, given that the SEC review generally takes 3-4 months.
The IPO market is currently in a very bad shape. Most tech companies which recently went public are struggling to float above their listing price. Groupon is around 5% below its IPO price of $20, while Zynga is more than 10% below its IPO price of $10.
Facebook reached a peak valuation of $80 billion in trading on secondary private exchanges like Second Market and Shares Post. It is expected to list at a valuation of more than $100 billion, but nothing is a given, considering the rough IPO market. Facebook had revenues of nearly $4 billion in 2011, which is expected to be increase to around $6 billion in 2012, as it starts monetizing its vast user base aggressively.
Facebook’s IPO will likely be led by Goldman Sachs and Morgan Stanley. It aims to raise approximately $10 billion. More than 1000 Facebook employees are expected to become millionaires following its IPO. Facebook may also see a talent drain as its employees cash out and leave the company.
Though Facebook’s share price may eventually appreciate, IPO investors likely won’t see as much gain as they would have in the case of Google or Amazon. Much of the value in Facebook’s stock has already been captured by early investors, leaving relatively little appreciation potential for retail investors.