Facebook: a stock market listing of 100 billion dollars?
November 29th, 2011 - 09:41 am ET by C. D.
The rumour that Facebook may be preparing a stock market listing has once again picked up with an official announcement on the subject anticipate by the end of the year. This would allow the company to list within the first six months of 2012.
Despite pressure from investors who want to participate in Facebook’s impressive growth as quickly as possible (enabling them to book profits in what is today a difficult market), the company remains prudent about a stock market listing. On numerous occasions, hopes of a quick launch have been dashed with an IPO fixed for late 2012/early 2013.
But with current economic conditions, and their degree of uncertainty, the question of listing on a stock market in the medium term appears to have been discussed. According to Bloomberg, Facebook could submit their application by the end of the year for a stock market listing in the spring of 2012.
Figures about listing the company at prices of up to 10 billion dollars are being bandied about, with such figures to value the company at 100 billion dollars – twice what was being envisaged in January 2011. The social network could also look at listing while web companies are the flavour of the da, as waiting too long could see their shine rub off.
Is Facebook worth 100 billion dollars? Facebook could become the biggest stock market listing ever undertaken for this kind of company. Timing such an event for the spring of 2012 would also coincide with the time that the company would have to regularly publish their financial results, no latter if it remains private or public, due to its size and number of shareholders.
Until now, Mark Zuckerberg has continually delayed a stock market listing, preferring to concentrate on growing the services user base (now with 800 million users, with more than 300 million accessing the social network via their mobile phone, from where the rumour that a Facebook Phone could be under development has once again originated).
It has to be said though that web companies IPO’s are not always successful. After an initial euphoria period, companies that have gone through this process have often seen their stock price fall back to, or even below, the initial public offering. This was something that we recently saw with grouped purchase site Groupon.
This is a good example of a common occurrence: a quick success company that could be threatened by competition can lead to users becoming unsatisfied in just a few quarters of trading. MySpace is a good example of this.