Facebook IPO filing expected within weeks, could reach $100B valuation

Posted:
in General Discussion edited January 2014


Facebook is making plans to file papers for an initial public offering as early as next week with a valuation that is expected to range between $75 and $100 billion, a new report claims.



After putting off an IPO for years, the world's largest social networking website is nearly ready to submit its papers, people familiar with the matter revealed to The Wall Street Journal. The deal will likely raise as much as $10 billion dollars for the company, sources added.



Facebook is reportedly close to picking investment bank Morgan Stanley to arrange the deal as the "lead-left," the title reserved for the bank that takes the lead in a financial transaction, such as an IPO. That would come as a blow to Goldman Sachs, which had originally been favored for the role. Sources did say, however, that Goldman would likely play a significant role alongside its rival.



According to the report's sources, Facebook may file documents with the Securities and Exchange Commission as soon as next Wednesday, though they noted that company executives may also wait to file until a few weeks later.



The IPO is expected to take place between April and June. If Facebook does manage to raise $10 billion on the deal, that would give it the fourth-largest IPO for a U.S. company, behind Visa, General Motors and AT&T Wireless. The company would also supplant Google as the biggest U.S. internet offering. The search giant, which has come into increasing competition against Facebook, raised $1.9 billion when it went public in 2004.



With a $100 billion valuation, Facebook would be worth almost one-fourth of Apple's current market capitalization of $417 billion. By comparison, Google was worth $188 billion as of the close of market on Friday.



Facebook is believed to have managed $3.8 billion in revenue last year, according to research firm eMarketer. While the company's revenues might not yet reflect those of a $100 billion company, investors are likely to place a high value on the fact that the website has become a household name with its more than 800 million users, 500 million of which visit the site daily.



Tipsters said Facebook CEO and founder Mark Zuckerberg, who was coached by late Apple co-founder Steve Jobs, put off an IPO because of concern that it would adversely affect the company's culture. A former Facebook employee revealed last year that Zuckerberg had modeled his "aggressive" early management style after Jobs.



Facebook eventually ran up against a government regulation that would require the company to publicly disclose its financial information once it had more than 500 shareholders. As such, Zuckerberg reportedly decided that an IPO was a better option than releasing financial information while remaining private.



The IPO will take place within a difficult economic climate, but analysts expect it to attract plenty of interest.



"The excitement around Facebook is still enormous," Max Wolff, an analyst at GreenCrest Capital who specializes in researching companies going public, told the Journal.



Peter Falvey, co-head of the technology banking group at Morgan Keegan & Co., admitted that the recent IPO environment "hasn't been particularly strong," but he noted that, with "the recent stock market strength and maybe some green shoots in the economy, there could be a fortuitous window for Facebook."



Apple and Facebook have maintained a delicate friendship in recent years. Though a Facebook app was one of the first applications on the App Store when it launched in 2008, an official iPad version didn't arrive until a year and a half after Apple released its touchscreen tablet. Jobs said in 2010 that Facebook had demanded "onerous terms" for compatibility with Apple's Ping social music discovery service. According to one report, talks between the two companies went on for 18 months before eventually breaking down.

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Comments

  • Reply 1 of 67
    bageljoeybageljoey Posts: 1,752member
    I admit, I use FB all the time. But I can't imagine it being worth a quarter as much as Apple!

    ...Of course, I thought Google was overvalued after its IPO, so I suppose I should just shut it...
  • Reply 2 of 67
    solipsismxsolipsismx Posts: 19,566member
    Quote:
    Originally Posted by Bageljoey View Post


    I admit, I use FB all the time. But I can't imagine it being worth a quarter as much as Apple!

    ...Of course, I thought Google was overvalued after its IPO, so I suppose I should just shut it...



    I'm with you. I don't see how some of these companies get their valuation when they don't produce anything except more ways to sell our information.
  • Reply 3 of 67
    Remove Zuck's appreciation for and having some level of friendship with Jobs and Apple on some level wanting to work with Facebook (like most companies)... what the heck does this article have to do with Apple???!!!!! Why is this on an Apple gossip/news site?!!!??
  • Reply 4 of 67
    solipsismxsolipsismx Posts: 19,566member
    Quote:
    Originally Posted by mesomorphicman View Post


    Remove Zuck's appreciation for and having some level of friendship with Jobs and Apple on some level wanting to work with Facebook (like most companies)... what the heck does this article have to do with Apple???!!!!! Why is this on an Apple gossip/news site?!!!??



    So you're wanting to know what an article has to do with Apple if you remove everything about Apple from the article. What I want to know is why you think your question makes any sense.
  • Reply 5 of 67
    irelandireland Posts: 17,572member
    How can I profit from this?
  • Reply 6 of 67
    Quote:
    Originally Posted by Ireland View Post


    How can I profit from this?



    Be an employee with options or a founder. Otherwise, Facebook IPO is about as safe of investment as Netscape, AOL, LinkedIn, MySpace, etc.
  • Reply 7 of 67
    bubble bubble bubble POP!!! They've been on a slow decline since August 2011...
  • Reply 8 of 67
    Quote:
    Originally Posted by SolipsismX View Post


    So you're wanting to know what an article has to do with Apple if you remove everything about Apple from the article. What I want to know is why you think your question makes any sense.



    Maybe we can use those same guidelines and remove Apple's name from any unpleasant Apple news... Poof! No longer applies to Apple.
  • Reply 9 of 67
    Quote:
    Originally Posted by Ireland View Post


    How can I profit from this?



    Can you short an IPO?



    At least 100x what it should be!
  • Reply 10 of 67
    aizmovaizmov Posts: 988member
    Overvalued.
  • Reply 11 of 67
    Boy, just a few more years of constant news items about potential Facebook IPO's and I might even be tempted to believe one of them... no doubt using my 7-inch iPad running Android, because that seems much more likely than an actual Facebook IPO.
  • Reply 12 of 67
    Quote:
    Originally Posted by Dick Applebaum View Post


    Can you short an IPO?



    At least 100x what it should be!



    A short sale is the first thing that comes into mind every time I hear "Facebook IPO."



    I toyed with the idea when Zynga went public.



  • Reply 13 of 67
    Quote:
    Originally Posted by aestival View Post


    boy, just a few more years of constant news items about potential facebook ipo's and i might even be tempted to believe one of them... No doubt using my 7-inch ipad running android, because that seems much more likely than an actual facebook ipo.



    hah..
  • Reply 14 of 67
    MacProMacPro Posts: 18,167member
    Quote:
    Originally Posted by Dick Applebaum View Post


    Can you short an IPO?



    At least 100x what it should be!



    I agree, watch the stock drop like a rock after a few weeks.



    This is what causes bubbles, people investing in companies that don't actually do anything.
  • Reply 15 of 67
    Quote:
    Originally Posted by cvaldes1831 View Post


    A short sale is the first thing that comes into mind every time I hear "Facebook IPO."



    I toyed with the idea when Zynga went public.







    The first question would be when to short Facebook. No doubt the first week or so it will climb.



    The second question would be the actual feasibility of shorting something when everyone knows Wall Street is planning the same thing, and you cannot compete with the likes of them in their marked territory. Facebook has most of the hallmarks of a pump 'n dump.
  • Reply 16 of 67
    Quote:
    Originally Posted by SolipsismX View Post


    I'm with you. I don't see how some of these companies get their valuation when they don't produce anything except more ways to sell our information.



    That's what I have always said . FB don't do sh**! You go there, look at pictures and blog. Blah. Now how is that worth 100 billion?

    Please.

    This is just another bubble.You see it, I see it and when if pops what then? Where are the whistle blowers?
  • Reply 17 of 67
    Maybe Apple should spend the $100 billion to buy FB for the next leg of growth LOL.
  • Reply 18 of 67
    Quote:
    Originally Posted by patrickwalker View Post


    The first question would be when to short Facebook. No doubt the first week or so it will climb.



    The second question would be the actual feasibility of shorting something when everyone knows Wall Street is planning the same thing, and you cannot compete with the likes of them in their marked territory. Facebook has most of the hallmarks of a pump 'n dump.



    Well, one would have to watch FB very closely and be ready to short within that first week and particularly the first day.



    Zynga opened high, then proceeded to sag throughout the opening day. Anyone shorting Zynga on day one got in at a great moment. I don't think anyone sane really thought Zynga would skyrocket. The Street was ready to short Zynga, anyone could have rode their coattails.



    A retail investor may not be able to compete with Wall Street, but one should still be able to get healthy profits from a pump 'n dump, even if you can't maximize yield like a automated trading program.



    FB may end up being a highly volatile issue, so going short-term on this equity might be the way to go. Grab your 10-15% every few weeks and get out, the classic Gerald Loeb playbook call.
  • Reply 19 of 67
    asciiascii Posts: 5,941member
    Seems like a risky investment to me. At any moment the government could pass some kind of privacy law and destroy their whole business model.
  • Reply 20 of 67
    jakebjakeb Posts: 557member
    Are you kidding me? 1/4 of AAPL valuation? I'm not saying that FB isnt' worth 100B, but AAPL is clearly worth more.
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