Facebook IPO likely to rank company among world's largest
Facebook IPO expected to be as high as $100 billion and will rank Facebook among the largest public companies in the world.
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Facebook's reported valuation of $75 billion to $100 billion compares with about $100 billion for McDonald's Corp., $90 billion for Citigroup Inc. and Amazon.com Inc. and $75 billion for Bank of America Corp. It would exceed the market cap of $55 billion for Hewlett-Packard Co., one of the world's largest technology companies by revenue.Skip to next paragraph
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Both Facebook and Google earn most of their money from advertising and are now competing to gain as much information as possible about their users to help advertisers target niche audiences.
According to eMarketer, Facebook is expected to grow its share of the U.S. display ad market to about 20 percent this year from 16 percent in 2011, above second-ranked Yahoo's expected share of about 13 percent. For overall online ad revenue, Facebook is seen grabbing just 8 percent of the market this year, compared with 45 percent for Google.
EMarketer estimates that Facebook's ad revenue will grow 52 percent to $5.78 billion this year and will reach $7 billion in 2013.
Despite presumably topping Google's public launch, Facebook spent more time growing behind the veil of private ownership than its rival.
Facebook was founded by Mark Zuckerberg and his college roommates in 2004 and is debuting on stock markets in its eighth year. Google's IPOcame six years after being founded by Larry Page and Sergey Brin. When Google turned eight in August 2006, its market cap was roughly $116 billion. Today, the company is worth nearly $190 billion — down from a peak of about $235 billion in November 2007.
Investors may be asked to bet heavily on the belief that Facebook will continue to revolutionize the way people communicate around the globe. Even with Facebook's heady growth rate, Google had ad revenue last year of more than five times what Facebook is expected to get in 2013. Yet it is Google that is mimicking Facebook in building a rival social network called Plus.
"There's the general feeling that Facebook might be the future of the way the Internet works," said eMarketer analyst Debra Aho Williamson.
Zuckerberg, 27, is already worth $17.5 billion, based on the latest estimates from Forbes magazine. Most of that wealth is drawn from the value of Facebook shares that have traded among a small universe of well-heeled investors that buy stakes in companies before they go public.
As the company gauges public demand for its stock, the number of shares offered and the price asked could change significantly. Groupon had to refile its securities paperwork repeatedly as regulators questioned some of its accounting methods. Even Google took in less than it hoped as people shunned an unorthodox auction-based offering.
John Fitzgibbon Jr., publisher of IPOScoop.com, said it's too early to get excited.
"Until they actually put the ink on the paper and push it across the desk of the SEC, it's all speculation," he said.
The possible filing next week isn't all that surprising.
Federal rules require companies with at least $10 million in assets and more than 500 shareholders to disclose its quarterly financial results and other details. The reporting requirement kicks in 120 days after the fiscal year in which a company exceeds the shareholder threshold for the first time.
Facebook's fiscal year ends Dec. 31, so it has until late April 2012 to comply with this requirement, having hit the 500-shareholder threshold last year. Because it typically takes three or four months after filing paperwork to issue the IPO, a Wednesday filing would allow it to meet the deadline. If it happens in May, it could become a lucrative birthday gift for Zuckerberg, who will turn 28 that month.
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