Based on conversation with some insiders, BusinessWeek reports that Facebook will probably not do an initial public offering in 2011, something that has been speculated pretty often. The company would instead focus on growth for the next year or two and acquire more users before it eventually goes public. While no one really knows, it is totally in the hands of 26 year old Mark Zuckerberg who controls the board.
However, should Facebook really wait till 2012 for cashing in on the massive success it has already received? Right now the company is valued at around $25 Billion, but that may change very quickly if the rumors about a competing social network from Google have any truth to them. Whatever Google launches will definitely not shut down Facebook but if it is a successful enough product like AdWords or Gmail, it will have a significant affect on Facebook’s value.
Secondly, with one privacy Fiasco after another, Facebook can get a massive class action lawsuit anytime and if a large financial penalty comes there way, it would directly affect Zuckerberg and the handful of investors. Plus, once Facebook goes public, the added scrutiny would insert pressure for greater transparency which can be a really good thing in terms of public image.
Last, but not the least, a lot of people who aren’t happy with Facebook are just waiting for a suitable alternative to switch, they are waiting for the next Facebook to launch so they can go to a more evolved social network. It doesn’t necessarily has to come from a giant like Google, Apple or Aol; it can be from anybody and as long as it addresses the privacy concerns that Facebook so often chooses to ignore, people will switch.
Any of these factors can hurt Facebook’s valuation significantly and may not prove waiting through 2012 to be the best of ideas.