When Will Facebook's Valuation Top $100 Billion?

Facebook’s valuation could surge to the 12-digit mark and beyond, possibly as soon as this October — that’s the earliest that the social network might submit paperwork to the Securities and Exchange Commission for an initial public offer.

So said CNBC’s Kate Kelly on the air this morning. Her report didn’t name any specific sources, and we’ve yet to find any independent confirmation. So, we’re considering this to be rumor or speculation.

Facebook’s Chief Executive Officer Mark Zuckerberg told an audience at e-G8 a couple of weeks ago that the company doesn’t plan to go public yet.

That said, here’s what she said on the air — let us know what you think in the comments section beneath this post:

Some of the private markets that track Facebook shares have given an implied valuation of about $85 billion…. now these are thinly traded markets. And let’s remember that as recently as January when Goldman Sachs made a well-publicized private investment in Facebook it was valued at $50 billion. But people who are on Wall Street and track this information tell me they think the IPO, if and when it happens could value the company at north of a shocking $100 billion dollars.

And when would this be? Well, apparently it could happen in the first quarter of 2012. We could see an S1 [filing with the Securities and Exchange Commission to go public] as early as October or November of this year. Now assuming they are on a fiscal calendar year, they will need to count the number of shareholders on December 31, and if indeed it is more than 500 that will trigger reporting requirements with the SEC, known as the 500 rule for short.

The company has until the end of April 2012 to disclose their financials, but they may just want to get ahead of that by doing a formal initial public offering, I’m told. And that could happen in the first quarter of the year. So we’ve got a massive valuation and a deal that could be coming within the next nine months or so.

One other factor to keep in mind is employee incentivization. The issue here is that employees of Facebook since last spring have not been permitted to sell their shares to other investors, except perhaps in some limited circumstances. But it’s become very difficult for them to do that. So there’s almost a perverse incentive, I’m told, for people to leave Facebook so they can cash out their equity.

Now there may be some exceptions to that. The company has the right to buy shares back for example. If you want to do a transaction, Facebook has the right of first refusal. So there may be some opportunities but really an IPO would make it a lot easier for employees to monetize their shares.