Facebook Inc. is inching closer to an initial public offering that it hopes will value the company at more than $100 billion U.S, according to people familiar with the matter.
The social networking firm is now targeting a time frame of April to June 2012 for an initial public offering, said people familiar with the matter. The company is exploring raising $10 billion U.S. in its IPO —- what would be one of the largest offerings ever —- in a deal that might assign Facebook a $100-billion U.S. valuation, a number greater than twice that of such stalwarts as Hewlett-Packard Co. and 3M Co.
A Facebook IPO has been hotly anticipated for several years, and viewed as a defining moment for the latest Web investing boom. The company has been vague about whether it would even make such an offering and silent on timing of an IPO. "We're not going to participate in speculation about an IPO," said Facebook spokesman Larry Yu.
The most recent IPO, an $805 million float of discount-deal service Groupon Inc. on Nov. 3, has plummeted 42% in price in the past five trading days after surging in its first day of trading. Business-networking service LinkedIn Corp., whose stock more than doubled from its IPO price on its first day of trading May 19, has since fallen 36%, but remains 33% above its IPO.
The company now appears poised to go ahead with a deal. But it will likely come to market at a time when investors are beginning to question the value of some newer Internet businesses.
The most recent IPO, an $805-million U.S. float of discount-deal service Groupon Inc. on Nov. 3, has plummeted 42% in price in the past five trading days after surging in its first day of trading. Business-networking service LinkedIn Corp., whose stock more than doubled from its IPO price on its first day of trading May 19, has since fallen 36%, but remains 33% above its IPO.
Facebook Chief Executive Mark Zuckerberg has in the past publicly expressed reluctance to do an IPO. And he has opted to keep Facebook private longer than many suspected he would.
But he is warming to the idea. Facebook is now in internal discussions over the timing of its filing with the Securities and Exchange Commission, and is considering filing dates as early as this year, said these people. Zuckerberg hasn't made any final decisions, these people cautioned.
Facebook remains aloof from Wall Street and shows signs of wanting to play by its own rules.
Companies often explore an IPO once they have $100 million U.S. in revenue. Facebook is expected to debut with more than $4 billion U.S. in revenue, making it bigger than Web veteran Yahoo Inc.
Facebook has gone so far as to craft its own prospectus, said the people familiar with the matter. A prospectus document —- which is filed with the SEC outlining the company's business —-is typically prepared by bankers and lawyers hired by a company.
Facebook Chief Financial Officer David Ebersman has been leading the company's talks with Silicon Valley bankers about an IPO, said people familiar with the matter.
Bankers are aggressively pursuing the company, but Facebook remains elusive about a commitment to specific banks, even though an IPO looms. Ebersman told some bankers that he is skeptical over what contribution investment banks could make to a Facebook IPO, since the company is so highly sought after by major investors, said people familiar with the matter.
A Facebook offering of $10 billion U.S. would be the largest IPO by any technology or Internet company. The largest U.S. Internet IPO, the $1.9-billion U.S. sale in 2004 by Google Inc. which valued Google at $23 billion U.S., ranks number three among global Internet IPOs.
