Finally, we have some news about the most awaited IPO of the year – Facebook. Apparently, a rumor is floating in Facebook offices that the social networking giant will file its first S-1 before the end of 2011. Mark Zuckerberg has himself said that it is coming, according to a report by Business Insider.
Facebook has long surpassed SEC’s 500 shareholder limit because of which it will be required to disclose its financial data to the public before the end of April 2012.
There are mainly two main reasons why companies choose to remain private – secrecy and control. After it’s forced to disclose its financials, it will lose the advantage of secrecy. Going by the current trend in tech companies, Mark Zuckerberg will be able to maintain a significant amount of control even after going public, thanks to supervoting shares.
It is rumored to have a valuation of around $80 billion currently, and I expect it to go public in the $100 – $120 billion range, assuming it has continued to grow at the same rate in the past few months.
Going public will also enable Facebook to keep its employees happy, by giving them a way to cash out, and become actual millionaires, not just paper ones.
Going by the encouraging response to the Groupon IPO despite being fraught with problems, I expect Facebook will easily be able to list at a $100 billion+ valuation.
A lot of newly minted millionaires are going to be roaming around Silicon Valley soon, thanks to companies like LinkedIn, Groupon, Zynga, Yelp and now Facebook going public.