Facebook IPO filing due next week

The company may seek to raise as much as $10 billion, The Wall Street Journal says, with a market cap of $75 billion to $100 billion. That would make the company more valuable than Amazon.com.

By Charley Blaine Jan 27, 2012 3:54PM
Charley BlaineUpdated:  4:07 p.m. ET

Facebook
, the colossus of social networking, is expected to file papers for an initial public offering next week.

The indications are that the IPO will suggest the company is worth $75 billion to $100 billion, The Wall Street Journal said.

Facebook's IPO could raise as much as $10 billion, the Journal said. The offering has been hotly anticipated as a defining moment for the latest Web investing boom.

Facebook, based in Menlo Park, Calif., has more than 800 million members around the world and has dramatically changed the way people interact with each other and share information on the Internet.

While $10 billion is the expected size of the offering, even a $5 billion offering would be the largest for an Internet company. It would dwarf the size of Google's (GOOG) 2004 IPO, which raised raised $1.7 billion.

Article continues below.
The biggest technology IPO was $5.9 billion for Infineon Technologies (IFFNY), the semiconductor maker that was spun off by then-parent Siemens (SI).

Facebook's valuation may be lower than guesses this summer that had put the overall value of Facebook at more than $100 billion. But disappointing IPOs from Groupon (GRPN) and Zynga (ZYNG) have tempered Wall Street's exuberance.

But it would still rank the company among the most valuable in the world. At $75 billion, the company would be the world's 75th-most-valuable company. The market capitalization would exceed those of Caterpillar (CAT), United Parcel Service (UPS) and Walt Disney (DIS).

A $100 billion valuation would rank the company ahead of McDonald's (MCD), Anheuser-Busch/Inbev(BUD), Citigroup (C) and ConocoPhillips (COP). It would even be worth more than Amazon.com (AMZN), which has a market capitalization of about $88 billion.

Google now has a market cap of $188 billion.

Not bad for a company that didn't exist until 2004.

Facebook was founded by Mark Zuckerberg with his Harvard roommates Eduardo Saverin, Dustin Moskovitz and Chris Hughes.

The name comes from the colloquial name for the book given to students at the start of the academic year by many U.S. colleges to help students get to know each other. Facebook allows any users who declare themselves to be at least 13 years old to register on the site.

The IPO was expected this year in part because the number of the privately held company's shareholders exceeds limits that permit it to remain private under U.S. securities laws.

The offering is expected to make hundreds of Facebook employees instant millionaires and may set off a frenzy of buying of real estate and upscale toys in the San Francisco Bay Area. It will make millions for the venture capitalists who funded the company in its early days, including Accel Partners, Greylock Partners and Meritech Capital Partners, the Journal said.

But the filing would also allow analysts and investors their first look at the company's finances. Its 2011 revenue was projected at $4.27 billion by EMarketer in September. That would represent a doubling of revenue from a year earlier.

A side story to the IPO is what investment bank will get the coveted lead position in managing the offer.

The Journal suggested that Morgan Stanley (MS) will be the winner. But Goldman Sachs (GS) may be the co-lead manager.

Morgan Stanley was up 40 cents to $18.55 today. Goldman Sachs rose $3.22 to $111.78.

Managing a big IPO means millions of dollars in fees for the investment banks. And millions more in accounting and legal fees.

What's not known is if those estimates are accurate. Nor does anyone know how profitable the company is. Other questions include how fast its user base is growing and other measures.
85Comments
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Facebook is a joke.  People who use facebook need to get out and get a life.

Jan 27, 2012 5:26PM
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I credit Zuckerberg for creating an enterprise which will ring the cash register for himself and others.  Unfortunately, fb, "smart phones," GPS, etc have accomplished no more than dumbed down people.  Many people are like zombies, walking around with our face glued to a computing device.  What is so important that we can't wait to check email once per day, or wait for a hand-written letter, or,(forgive me for thinking this but), actually talking to someone without a phone in our hand??
Jan 27, 2012 5:05PM
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Hey MSN, don't ever start playing a video without my permission again. Got it?
Jan 27, 2012 4:51PM
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I'm continually amazed with the unwavering popularity of FB. I was on it for about a year before I closed my "account."  IMHO; it's painfully self-serving, and quite frankly, boring. All the users with 700 'friends', might want to put down their mobile device and interact with real people once in a while..you know... actually be social.
Jan 27, 2012 4:51PM
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F.B.? Where the only thing for sale is you.  How does a free company, without any tangible product, generate a worth of 75 billion?  By selling the consumer to retailers. 
Jan 27, 2012 4:33PM
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Google and Amazon will always be useful. Facebook will eventually die out the way Myspace did. They're going to be set for life though so it doesn't really matter...LOL

Jan 27, 2012 5:28PM
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Facebook more than likely has reached its peak.  Consumers are tired of their info being sold (that is how Facebook makes money ) Some are attempting to move over to Google as I am.  Just because 800 million people have FB accounts, does not justify their value.  This is what happened to the dot.coms.  They valued themselves way more than they could justify on paper.  If FB believes they are worth that much "more" money, then what exactly are they selling to collect those types of revenues ?  If they can not make it on what they currently process, then what magically makes it work with new money ?  The only investors for this IPO should be quick and out, make a few dollars and get out of dodge,
Jan 27, 2012 6:03PM
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fbh8ter, I'm one too.  I thought it was cool for about a month, catching up with old acquaintances and seeing what they're up to without having to attend a high school reunion, for example.  Then I got bored.  They were acquaintances for a reason.  I don't need to know that they "Ate Frankenberries for dinner.  Yay!"  and that Stephanie "luv[s] Frankenberries." I haven't heard from or even thought about them for many, many years.

 

FB doesn't produce anything.  Okay, it gets paid for advertising so we can all buy more and increase our consumer debt.  Cripes I sound old and crotchedy.  Look what you've made me become Facebook!

Jan 27, 2012 4:51PM
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$80 - 100 Billion for what ?  More vaporware ?  Guess no one learned anything in the last two crashes of internet "nothing" companies.  If I was Zuckerberg I would sell ever share of stock in this "company" the first day.  People are so fickle, it won't be long before something else gets their attention.  AOL ?  GEOS ?  Myspace ?  DOS ?   Ghosts of Christmas past.
Jan 27, 2012 5:43PM
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Just another reason to go out and get a life and not be on Douchebook!!!
Jan 27, 2012 5:58PM
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and if facebook should go bankrupt, what do we have to offer the secured creditors? rooms full of servers, computers and, most unfortunately, personal information? moving information around is not the same as making something and selling it.
Jan 27, 2012 4:42PM
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I agree with Tom, some of those Facebook users are like addicts (a few on my friends list in fact).  Does get a lil creepy.
Jan 27, 2012 5:21PM
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Society has finally become just a bunch of mindless FOOLS!!!!!!!!!
Jan 27, 2012 5:17PM
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I would not be buying facebook as far as a investment perspective, and here is why. Although, it may be the dominant force in social media, how much larger do you really expect facebook to get? Most people that will use facebook at one point in their life already have profiles. So if it stays around as a dominant force in the social media world there is very little room for growth unless it is able to successfully branch out into other areas which I haven't seen it do yet.

 

Secondly, there is plenty of competition, and some of the other social sites like myspace were extremely popular and wound up being duds. Privacy and the whole sharing your status's or information with others has gotten a lot of attention lately and people have begun to not post as much stuff like that on their profiles as before which made the site exciting to begin with, and with people turning their profiles off to be searched, new users won't find someone they would like to reconnect with. With mobile devices being so popular now, if you wanted to get a status update from someone now, you don't have to log into facebook, you can just shoot them a text, or email, and get a response immediately, because who wants to see your conversation with someone on someones wall where everyone can read it?

 

I think facebook is a great tool for sharing photos and staying in touch with people, but I also think it is limited, and from an investment standpoint, I can not see it being worth $100 billion dollars, that's worth more than big banks like CitiGroup, or Bank of America, to state that facebook is as worth as much as companies like that is absurd, one earns a few cents per click of an ad while the other earns money from the loans for your cars and cars that you pay monthly.

 

Facebook may be around for a while, but those numbers do not justify it's market value, and I think make for a bad investment. Initially it may jump because everyone will be buying it, but eventually it will drop in value. Also this is a company that can be replaced by something very easily just like it replaced myspace, since it's a free service, people would be willing to make the change for the next big thing.

Jan 27, 2012 5:51PM
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Ted Sauce, you hit it right on the money. I can't stand seeing people without a phone in their hands, people are so addicted they dare to cross the street and not look up to see if a car is coming. When people eat they have the fork in one hand and cell phone on the other, GET A LIFE!.
Jan 27, 2012 5:29PM
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What is this company selling to make it worth 100Billion ? That's more than the value of a third world country !
Jan 27, 2012 5:34PM
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Can you say dot com bust?  Web sites that are supposed to be more valuable than GM, which make nothing, sell nothing, produce nothing have a paper value driven by over exuberant buyers of their stock, but there is absolutely nothing to back it up.  They sell ads.  How many ads can be sold to kep all these companies aflaot?  I don't know, but I do that it is a finite well and it wil eventually run dry, like all wells.
Jan 27, 2012 4:54PM
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WHO CARES? These sites are for MORONS who have nothing constructive to do.
Jan 27, 2012 5:39PM
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I agree with dam tired.  Zuckerberg is trying to hit it big before Facebook tanks.  Once the decline starts, it will be steep.

Jan 27, 2012 5:17PM
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Very amazing how some people have gotten so rich because of other people's ignorance giving away their personal information.
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