Facebook could file documents with the Securities and Exchange Commission as early as this coming Wednesday, said one person familiar with the matter. But that timing is just one scenario Facebook executives are considering, the person said. Executives are also considering filing a few weeks later, the person said.
Facebook could file IPO paperwork as early as Wednesday of next week, and Morgan Stanley is close to winning the "lead left" position in the IPO. Facebook has been valued between $75 and $100 Billion dollars.
People familiar with the matter have said the company is targeting an IPO sometime between April and June.
A $10 billion Facebook offering would rank fourth among IPOs for U.S. companies, behind Visa Inc., General Motors Co. and AT&T Wireless, according to Dealogic. It would rank Facebook as the biggest U.S. Internet offering ever, replacing Google Inc., which raised $1.9 billion in 2004 at a $23 billion valuation.
At a $100 billion valuation, Facebook would be worth about the same as McDonald's Corp. and nearly half of Google.
Facebook's revenue is driven by its advertising business, as big brands rush to the site to interact with consumers through display ads and fan pages. Facebook has been able to increase its world-wide advertising revenue from $738 million in 2009 to $3.8 billion in 2011, according to estimates from research firm eMarketer. It isn't known if Facebook is profitable.
Facebook's final valuation will be determined by a variety of factors, people familiar with the matter said, such as investor demand for social media, the IPO market and the health of the European economy.
The IPO will mint a new generation of Silicon Valley millionaires on the level not seen since Google's offering. Some 3,000 people work at Facebook.
An IPO will also test the ability of Chief Executive Mark Zuckerberg, age 27, to manage a global company whose financial performance will be scrutinized every three months by investors. Mr. Zuckerberg started the company in 2004 out of his Harvard University dorm room. Overall, about 500 million users now log into the site daily, according to Facebook.
Mr. Zuckerberg had been reluctant to push forward with an IPO. People familiar with his thinking said he has been fearful of the damage an IPO could do to the company's culture. He wants employees focused on making great products, not the stock price, they said.
But outside forces are partly pushing his hand. Facebook executives began to realize in 2010 that Facebook would have more than 500 shareholders by the end of 2011, which would trigger a regulatory requirement that Facebook start publicly reporting financial information.
Mr. Zuckerberg decided it made more sense for Facebook to go public and reap some financial benefit from an IPO, rather than stay private but have to release its financial information, said people familiar with his thinking.
Leading the Facebook sale would be a huge win for Morgan Stanley, which last year cemented its position as the top Internet stock underwriter by leading the IPOs of LinkedIn Corp., Groupon Inc., and Zynga Inc. The bank's global tech banking team, led by Michael Grimes and Paul Chamberlain, is also based in Menlo Park.
Facebook would cap a recent wave of Web IPOs, some of which have struggled amid growing investor scrutiny of the new Internet companies. But investors and analysts said now could be a good time for a Facebook offering.
This year, the overall market has risen, and on Friday other Internet stocks rallied on news that Facebook would soon file for a deal. "The excitement around Facebook is still enormous," said Max Wolff, an analyst at GreenCrest Capital, which researches companies going public.
The recent IPO climate "hasn't been particularly strong," said Peter Falvey, co-head of the technology banking group at Morgan Keegan & Co. But Mr. Falvey added that with "the recent stock market strength and maybe some green shoots in the economy, there could be a fortuitous window for Facebook."
COMMENTARY: I'm getting wet in anticipation of that IPO S-1 Registration Statement so we can all finally findout if all the Facebook hype, Facebook Halo Effect and Holy Grail of advertising bullshit talk was justified or was just a scam.
Shareholders of Facebook Inc. is facing a three-day suspension of trading on secondary markets this week, people with knowledge of the matter said.
While buy and sell orders can be made, transactions won’t be processed by Facebook’s attorneys at Fenwick & West LLC from today until Jan. 27, said the people, who declined to be named because details on secondary transactions are kept private. The halt pertains to trading of Facebook shares only, one of the people said.
Private companies sometimes halt trading to ascertain how many shareholders they have, said Barry Silbert, chief executive officer of SecondMarket Inc., an exchange where Facebook shares are traded.
Some companies suspend trading ahead of a filing to make sure that investors can’t buy or sell until all of the information is public, said Sam Hamadeh, chief executive officer of New York-based PrivCo.
Hamadeh, whose firm provides research on more than 30,000 private companies said.
“Facebook and companies who do this don’t want to expose themselves to lawsuits related to the fact that some people had it before others and were able to trade on it.”