Facebook eyes possible IPO, public financial disclosures
- — 07 January, 2011 09:34
Just days after news surfaced that Facebook had received a massive cash infusion, reports are out that the social network is preparing to disclose financial information or prepping for an initial public offering.
The Wall Street Journal reported Thursday afternoon that Facebook is on the cusp of gaining 500 shareholders, an invisible line enforced by the U.S. Securities and Exchange Commission (SEC) that will force the company's hand.
Citing a 100-page memo reportedly distributed to potential company investors, the Journal noted that Facebook expects to cross the 500-shareholder threshold this year. Once it does, SEC rules dictate that the company file financial information, regardless of whether the company is traded publicly.
That report comes just a few months after Facebook board member, venture capitalist and PayPal co-founder Peter Thiel said that Facebook was looking at making an initial public offering sometime after late 2012.
The Journal also reported that the Facebook memo notes that the social networking company will "likely" be a publicly traded company by next year.
"I think that [CEO Mark] Zuckerberg is wise to put off going public for a while," said Dan Olds, an analyst with The Gabriel Consulting Group. "Facebook has done a great job at building up a massive number of engaged users and there is big value in that. But this is a company that is going to get a huge amount of scrutiny from every direction and they need their ducks in a row before going public."
Olds added that Facebook executives will need to make sure they have several things in place, including management controls and compliance mechanisms.
Facebook made big news earlier this week when reports hit that the company had just received a $500 million infusion of cash from global investment bank Goldman Sachs and a Russian investor. Goldman Sachs valued the company at $50 billion.
This news also comes on the heels of widespread speculation in the past day that another social networking company - LinkedIn - is working on an IPO of its own.
Reports are rampant that LinkedIn actually will beat out social networking heavyweights like Facebook and Twitter to the IPO gate.