Time to add another name to the soaring IPO market. CNBC reported Monday that Facebook is likely to go public in the first quarter of 2012 at a valuation upwards of $100 billion.
This newest valuation is double the company’s $50 billion valuation from back in January when Goldman Sachs and other private investors put $1.5 billion into the company. More recently, says CNBC, the company has been valued at $85 billion, and by the start of 2012, that number could reach $100 billion.
According to CNBC’s sources, the IPO would probably be triggered by 1934 Securities and Exchange Act known as “the 500 rule” which says that once a company has more than 500 investors, it has to begin releasing quarterly financial information to the SEC, just like public companies do. Facebook is likely to reach 500 investors this year and would probably want to launch a formal IPO before a public-company reporting obligation kicks in next April, the sources said.
Another reason that Facebook may be going public, says CNBC, would be to increase employee compensation. Early last year, the company limited its employees’ ability to sell shares privately to other investors, which could be persuading these employees to quit Facebook in order to cash in on their shares. But if the company were to go public, employees would be able to sell their shares on the open market at various points during the year.
When questioned by CNBC early Monday, a Facebook spokesperson wouldn't comment on the possible public offering, but last month at a conference, Facebook COO Sheryl Sandberg said that an IPO was “inevitable” and called it “the next thing that happens.”