It has changed the word ‘friend’ from a noun to a verb, snagged 800 million users worldwide, and made its founder one of the most famous entrepreneurs in the world - now social media giant facebook is setting its sights on the stock market - in a move that could value the firm at $100 billion.
The California-based firm was yesterday poised to file to sell its stock on the open market in a debut likely to be the most talked-about initial public offering (IPO) since Google in 2004. Early estimates say the company expects to raise between $5 billion and $10 billion. At $10 billion, the whole company would be valued somewhere between $75 billion and $100 billion.
The highly anticipated documents facebook files with the US Securities and Exchange Commission will reveal how much it intends to raise from the stock market, what it plans to do with the money and details on the company’s financial performance and future growth prospects. But investors will have to wait a while before they can snap up the stock - shares usually start trading three to four months after the filing.
Market watchers are anticipating some kind of twist - perhaps including a provision for the 800 million users of facebook, a brand all about personal connections, to get in on the action. “There is a feeling that there will be something unique in store for facebook users,” says Reena Aggarwal, a finance professor who has studied IPOs at Georgetown University’s McDonough School of Business in Washington.
After all, facebook founder Mark Zuckerberg is anything but a conformist. He turns up at business conventions in a hoodie. “Cocky” is the word used to describe him most often, after “billionaire”. He was Time’s person of the year at 26. So when he takes facebook public, why would he follow the Wall Street rules?
“Pandemonium is what I expect in terms of demand for this stock,” says Scott Sweet, senior managing partner at IPO Boutique, an advisory firm which studies market debuts. “I don’t think Wall Street would want to anger facebook users.”