Here’s yet another update on the Facebook IPO. Rumors of the much awaited IPO have been floating since months now, with no official announcement from Facebook. We previously posted that Facebook may finally go public in May. More recently, Facebook trading on Second Market and SharesPost was suspended for some days, presumably because it is going to file an S-1 statement for the IPO soon.
According to a new report by WSJ, Facebook could file papers for a public offering by February 1. It is aiming to raise $10 billion at a valuation of $75 billion to $100 billion. The deal will be led by either Morgan Stanley or Goldman Sachs, both of which are the front runners. Both the investment banks are said to have reduced their fees to as low as 1% (about $100 million in total) to win the deal, instead of their usual 3% to 5% in an IPO of this scale.
Apparently, both NASDAQ and the NYSE are clamouring for Facebook’s attention, and trying to get it listed on their exchanges.
Facebook will likely go through a standard bookbuilding process for price discovery, instead of the Dutch auction process which was used by Google in its IPO.
Given the enthusiasm and excitement surrounding Facebook’s IPO, it may easily be able to achieve a $100 billion valuation, and even higher after it goes public.
Recent IPOs like Zynga’s and Groupon’s haven’t done very well though. Both companies are currently trading below their IPO price. LinkedIn, on the other hand, is trading much above its IPO price.
Facebook now has more than 800 million users, and is estimated to have made nearly $4 billion in revenue in 2011.
Another really incredible thing about the Facebook IPO is that it will spawn more than a 1000 new millionaires. This tremendous amount of wealth creation could create a group of techies which could go on to become even more powerful than the famed Paypal Mafia.