Is Facebook Finally Ready to IPO?

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It's taken a long time, but Facebook may finally be ready to go public.

Sources are telling The Wall Street Journal that the fast-growing social networking website is planning to go public during the second quarter of next year.

Don't get too excited. Facebook would no longer be considered a ground-floor opportunity at this point. The company is reportedly looking to raise $10 billion in an IPO that would value Facebook at a cool $100 billion. It's a price tag that would make Facebook the country's second-most valuable Internet company, behind only Google (GOOG).

Where do you go when you're awarded the silver medal right out of the gate?

Zuckerberg's Sweet Reward

Even if you didn't catch the partly fictionalized The Social Network, you probably know that CEO Mark Zuckerberg does not suffer from a lack of ego. He was criticized for turning down buyout offers, most notably Yahoo!'s (YHOO) bid to acquire the company for $1 billion.

Zuckerberg's clearly getting the last laugh now, since Facebook is set to go public at a price that is several times over what Yahoo! is fetching these days.

It's also quite possible that Facebook doesn't even want to go public now. But an SEC rule stipulating that companies need to file their financials when they have more than 500 shareholders is kicking in. If Facebook is going to have to let the world know exactly how much money it's making, it may as well begin trading publicly.

An IPO will also help attract and retain top talent, as excessive grants of stock options to employees are what pushed Facebook over the 500-shareholder threshold in the first place.

Don't Necessarily Deny Facebook's Friend Request

The growth has certainly been impressive at Facebook. There are now more than 800 million users, with 500 million members checking in on any given day. Monetizing a free website is easy through display ads, and Facebook's likely looking for revenue to double to $3.8 billion this year, according to research firm eMarketer.

That said, investors probably have a bad taste in their mouths when it comes to dot-com darlings going public. Groupon (GRPN) went public just a couple of weeks ago, and it has already crashed through the floor of its $20 debutante price. If Zynga falters after it goes public in the coming days, it will be understandable if investors steer clear of the very companies they were dying to get a piece of earlier this year.

However, there's nothing wrong with a little sobriety. These events may actually force underwriters into taking Facebook public at a more reasonable price, giving buyers next year more compelling entry levels.

Then again, April, May, or June of next year is a long way out. Time has only made Facebook more popular and valuable. If the social networking site's momentum continues, who knows if even $100 billion may be too low. There's no point in settling for the silver medal of dot-com market capitalizations when there's gold at stake.

Longtime Motley Fool contributor Rick Munarriz does not own shares in any stocks in this article. The Motley Fool owns shares of Google and Yahoo!. Motley Fool newsletter services have recommended buying shares of Yahoo! and Google.




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21 Comments

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jpgordo

I love the idea of being defined, targeted, judged and quantified by what I watch or listen and who my friends and family are.  Facebook must be stopped... simple as that... for the good of the world.

http://mankabros.com/blogs/onmedea/2011/09/01/facebook-must-be-stopped/

November 30 2011 at 2:15 PM Report abuse rate up rate down Reply
1 reply to jpgordo's comment
warrenbent

Just not by citizens who can already voluntarily choose to stop Facebook by merely not being Facebook users?

If you want to stop Facebook for YOU, that's fine. Just don't use Facebook.

But stopping it for the "good of the world" (ie, everybody else who DOES want to use Facebook) is akin to others FORCING you to join "for the good of the world".

Nothing good ever comes from those who profess to know what is "for the good of the world".

November 30 2011 at 2:32 PM Report abuse rate up rate down Reply
agt4085

The largest scam in world history is being pulled off right in front of everyone. These ipo's that their shoving out there are worthless. Facebook is worthless. All that would have to happen is every person on Facebook drops out and there gone. The stock market has turned into a forced pension package for millions of people around the world. The money thats invested into these companies is all fake doesn't exist and will be gone in five years. We are now in a world of companies lasting 3 to 7 years and then they need a bailout or they go belly up. Everyone who is forced to put money into pensions is propping up this entire scam. Soon that money will be gone and there will be nothing left. No reason to invest companies profit sheets will be drying up every year from now till the end of time.Soon the 1% percent will just be a kingdom and the 99% will be the peasants.

November 30 2011 at 10:24 AM Report abuse -2 rate up rate down Reply
2 replies to agt4085's comment
warrenbent

"All that would have to happen is every person on Facebook drops out and there gone"

What company would not cease to exist if it lost all its customers?

Except instead, in Facebook's case, they keep adding customers.

November 30 2011 at 2:52 PM Report abuse +1 rate up rate down Reply
warrenbent

By the way, where do you get the absurd notion that no company exists that is not more than 7 years old?

While cartoon books may be entertaining, they aren't nearly as educational as you seem to imagine.

November 30 2011 at 2:54 PM Report abuse +1 rate up rate down Reply
Sandy

Facebook attended the Bilderberg group (NWO) meeting last June, 2011. They are collecting all your information for them.

November 30 2011 at 10:04 AM Report abuse rate up rate down Reply
1 reply to Sandy's comment
t121365

Hmmmm, proof?

November 30 2011 at 1:36 PM Report abuse +1 rate up rate down Reply
Chris and Suzi

I enjoy facebook as a leisure activity. Leaving my birth state in my teens, I have found all of my childhood friends. It is an easy way to keep up with family ( extended too), pictures, weddings, births.......Facebook is a great tool. You just need common sense and to be selective of what you post.share. Facebook has brought a lot of happiness and good friends back into my world. I give credit to someone so young, coming up with an idea and following through. 800,000 million people use facebook, that must say something.

November 30 2011 at 8:40 AM Report abuse +4 rate up rate down Reply
aupagandl

USA first of all we have protection rights using the copyrights from company's that allow anybody to portray freedom of speech.It is a tool to further our verbal expressions to anyone who wishes to learn or browse any information we ourselfves are offering to the world.so to speak.Now mind you,Governments,teachers, authorities,family's take a peek at what makes us tick, and believe me I've read some real dingers out there that make me blush, I think it may be a good tool for general purposes ihough not for any illegal encounters. basically no one is permitted to swipe our personal information for self gain. we are trusting browsers like they would be our best friends.It is up to us to decide how much information to write about. basically its letting people know our Education and how we've applied subjects to find careers and employment.plus it gives us a page to brag about anything ,economy,etc......... i don't have anything to hide ,so therfore I don't worry. from my computer / aupagandl 2011

November 30 2011 at 2:02 AM Report abuse rate up rate down Reply
patge

People are slowly, but surely, finding out that Facebook is dangerous. A world of complete strangers have total control over your personal information and private conversations. That is not a good thing.

November 30 2011 at 12:26 AM Report abuse rate up rate down Reply
ntf2010

A lot of people still don't like or use Facebook

November 29 2011 at 9:56 PM Report abuse rate up rate down Reply
sasha

Wow, another one of those executives who invented nothing whatsoever and is wealthy because of it. What a country!

November 29 2011 at 9:35 PM Report abuse -2 rate up rate down Reply
1 reply to sasha's comment
warrenbent

Invented nothing?

Facebook has 800 million users worldwide in a short number of years, and is the second most recognizable internet brand on the globe (after Google).

What a moron!

November 30 2011 at 12:05 AM Report abuse +1 rate up rate down Reply
Nekima

face book stinks

November 29 2011 at 9:23 PM Report abuse -2 rate up rate down Reply
BUFFALO

I think facebook is subject to some real compitition and could fall to the hoards of want to be's waiting in the wings no thanks.

November 29 2011 at 7:56 PM Report abuse rate up rate down Reply
1 reply to BUFFALO's comment
warrenbent

Well, once upon a time Netscape was the most popular internet browswer, AOL the most popular ISP, and Yahoo the most popular search engine. So it's certainly possible someone overtakes Facebook.

On the other hand, first mover is a big advantage due to what is known as "the network effect" in the communications space.

Who are these "hoards of want to be's waiting in the wings"?

November 30 2011 at 12:03 AM Report abuse rate up rate down Reply