Facebook Plans IPO in Mid-2012

The world’s dominant social network may finally go public sometime in the second quarter of next year, according to a report from the Wall Street Journal, which said the company hopes to raise $10 billion through a limited IPO valuing the company at $100 billion overall. With only a small portion of total shares for sales, this would still make it one of the largest public offerings ever, the WSJ reports.

The timing and size of Facebook’s IPO have been the subject of fevered speculation for several years now, during which time founder and CEO Mark Zuckerberg proved surprisingly reluctant to go public -- perhaps because he felt it would be premature, or perhaps because he feared giving up any control over the company (or some combination of the two).

If the WSJ report (based on sources “familiar with the matter”) is accurate, the timing of the IPO will be closely scrutinized yet again. For one thing, the news of the IPO plans leaked not long after several first-wave social media IPOs fell flat, including Pandora and Groupon. After debuting at $16 per share, Pandora sank to $10.15 per share today, reflecting skepticism about the company’s potential profitability; meanwhile Groupon’s share price has declined from $20 at the IPO to just over $16 today, also on concerns about profitability.

However social media watchers say Facebook doesn’t have to worry about cooling enthusiasm for social media stocks, due to its unique position as far and away the largest social network in the world -- leading both in numbers of users and average time spent, as well as other measures like number of apps and independent app developers.

Lou Kerner of Liquidnet, a “dark pool” private shares brokerage focused on social media, noted that “Facebook is the premier social media (Second Internet) company, similar to how Google was the leading first Internet company.  As such, Facebook is less dependent on an IPO window given the massive global interest it will generate.”

Facebook is also on much firmer ground in financial terms than Pandora or Groupon, due mostly to strong continued growth in advertising revenues. Total ad revenue is set to jump from $1.86 billion in 2010 to $3.8 billion this year and $5.78 billion in 2012, according to a forecast from eMarketer. Facebook apparently became profitable sometime in 2008-2009.

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