CNBC has caused a bit of a stir today with its reporting about Facebook and its IPO, which CNBC pegs as likely in the first quarter of next year. Without a doubt, Facebook will be the most hotly anticipated stock debut at least since Google, and maybe ever.
- Associated Press
- Facebook founder Mark Zuckerberg
The Wall Street Journal has swarmed all over Facebook’s evolving IPO plans like the Dallas Mavericks defense on LeBron James. Here is a look at the highlights:
Next Stop: $100 Billion: This is not a typo. People close to Facebook believe the company is growing fast enough to justify a valuation of $100 billion or more when the company goes public, our Journal colleagues Geoffrey Fowler and Anupreeta Das reportedsix weeks ago.
CNBC also reported the $100 billion plus valuation today. Only a couple dozen U.S. companies, including lions of corporate America such as Exxon Mobil, General Electric and J.P. Morgan Chase, have stock-market values above $100 billion.
Profit Powerhouse: Facebook is on track to exceed $2 billion in earnings before interest, taxes, depreciation and amortization for 2011, Fowler and Das reported six weeks ago. That’s even higher than the expected 2011 profit circulated in the early part of the year when Goldman Sachs and Russian investment house Digital Sky Technologies invested in Facebook at a $50 billion valuation. If Facebook ends the year with $2 billion in Ebitda, would IPO investors stomach a 50 times trailing multiple valuation? Seems bubble-like.
The IPO Swarm has Begun: Trust us. Wall Street bankers, lawyers, P.R. mavens, caterers and everyone else are slobbering for a slice of the Facebook IPO magic. Facebook has been meeting with potential bankers that want to shepherd the IPO. Goldman Sachs is thought to have an inside track to lead the IPO thanks to its recent investment in Facebook, but don’t count out big banks such as J.P. Morgan and Morgan Stanley, which have led recent big tech IPOs.
Why Go Public? Facebook CEO Mark Zuckerberg has been non-committal about an IPO for a long time. As recently as December, Zuckerberg gave his weird deer-in-headlights stare when “60 Minutes” asked him whether he would ever push his baby into the public markets. “Maybe,”was Zuckerberg’s answer. But momentum is taking over.
As The Journal has reported, the SEC requires companies with 500 or more private investors to begin disclosing financial information. Facebook has said it is slated to cross that mark by year end, giving Facebook until April 2012 to begin spilling its financial guts to the public and putting pressure on Facebook to go IPO to reap some benefit from the SEC requirement. Employees also are antsy to be able to sell the stock they’ve been accumulating in Facebook. The company has closed the door to employee stock sales in private markets such as Second Market and SharesPost, which have provided a controversial venue to buy and sell shares of non-public companies.
Even Zuckerberg’s adult supervision, COO Sheryl Sandberg, recently said a Facebook IPO is“inevitable.”
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