A New IPO-Style Stock Structure for Facebook, But No Official IPO Plans

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By Eric Eldon Comment

stocktickFacebook has said for years that it has no near-term plans to go public — and it reiterated that point today when it said that it has created a dual-class stock structure that gives current shareholders 10 times the voting power of new shareholders. Called “class B” shares, this is part of a structure used by some companies to maintain control over voting rights. It lets investors maintain control over the company even if it makes an initial public offering and creates a “class A” set of shares to sell to the public.

The most obvious example of this is Google, which put in a similar structure before its 2004 IPO, although other Silicon Valley companies have similar structures, like Facebook platform social gaming company Zynga.

Here’s the official statement Facebook sent us:

Facebook is a private company so we don’t typically share details on stock-related matters.  But we did introduce a dual class stock structure because existing shareholders wanted to maintain control over voting on certain issues to help ensure the company can continue to focus on the long-term to build a great business.  This revision to the stock structure should not be construed as a signal the company is planning to go public.  Facebook has no plans to go public at this time.

So there we have it. It’s a new structure. This does not materially change the vague timeline that the company has previously suggested for its IPO plans. Earlier this year, Facebook appeared poised to wait awhile for an IPO. It let outside investor Digital Sky Technologies buy stock from current as well as former employees.

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