View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. Leadership
  2. Strategy
November 29, 2011

Facebook heading for IPO at $100bn valuation: report

Social network will finally go public next spring, according to the Wall Street Journal. But is it worth the valuation?

By Cbr Rolling Blog

Facebook is finally expected to go public next spring with an initial public offering (IPO) that could value the social network at $100bn, according to reports.

The Wall Street Journal – as ever quoting "people familiar with the matter" – says the company is targeting April to June 2012 for the IPO and hopes to raise $10bn from the move. The WSJ says that would be the biggest IPO ever by a technology or Internet company.

An IPO has been on the cards for a while at Facebook, even though founder and CEO Mark Zuckerberg has in the past reportedly been unsure about going public, preferring to keep the site private.

But as Facebook attracts more shareholders it is getting close to the point where it has to declare financial information, according to Securities and Exchange Commission (SEC) regulations.

Any company with more than 500 shareholders has to publicly disclose financial information, whether it is public or private. This puts Facebook at a disadvantage as it would have the liability associated with being public without any of the financial benefits, the Wall Street Journal says.

Facebook was founded in 2004, just under eight years ago. It now boasts more than 800 million users across the world and is the social network of choice, eclipsing older rivals such as MySpace and Bebo.

It has also forced Internet giant Google into a series of moves in the space as it desperately tries to claw back some of the huge amounts of web traffic Facebook is gobbling up. Google has created, and disbanded, Wave and Buzz, before settling on Google+. It now says it has 40 million users of that service.

Content from our partners
Scan and deliver
GenAI cybersecurity: "A super-human analyst, with a brain the size of a planet."
Cloud, AI, and cyber security – highlights from DTX Manchester

According to Bloomberg, Facebook’s revenue is expected to hit $4.27bn in 2011, more than doubling from $2bn in 2010. The majority of its revenue will be from advertising, which is expected to rise from $1.86bn last year to $3.8bn this year.

However, these figures from EMarketer came with a word of warning. It had originally predicted ad revenue would reach over $4bn, before revising it down to the $3.8bn mentioned above.

"Even though Facebook has spent several years wooing marketers, many of them still believe the ads aren’t effective at driving clicks and other actions," said Debra Aho Williamson, an analyst at EMarketer. "Facebook must either work to improve its click-through rate or show advertisers that advertising on the site is effective even without a click or other action."

So is a $100bn valuation realistic? Other recent technology or Internet-related IPOs don’t offer Facebook a huge amount of comfort. Discount coupon provider Groupon went public in early November but has seen its price steadily fall since then and has in fact fallen 42% in the last five days of trading, according to the WSJ.

Business social network LinkedIn also saw first-day trades fly high after floating in May this year, but its stock has fallen 36% then. It still, however, sits around 30% higher than its IPO.

Websites in our network
Select and enter your corporate email address Tech Monitor's research, insight and analysis examines the frontiers of digital transformation to help tech leaders navigate the future. Our Changelog newsletter delivers our best work to your inbox every week.
  • CIO
  • CTO
  • CISO
  • CSO
  • CFO
  • CDO
  • CEO
  • Architect Founder
  • MD
  • Director
  • Manager
  • Other
Visit our privacy policy for more information about our services, how Progressive Media Investments may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.