Facebook IPO Rumours Heat Up

by Matt Klassen on November 22, 2011

While speculation that Facebook would be going public has been simmering on the backburner of the blogosphere for several months now, it looks like someone is now turning up the heat.

According to Business Insider, a source close to Facebook divulged that even within the company rumours between employees have reached a fever pitch, as apparently company CEO Mark Zuckerberg has kicked his ambiguous ramblings about the inevitability of the company’s Initial Public Offering (IPO) into overdrive.

Such a change in attitude from Zuckerberg is, it seems, the primary impetus for this renewed speculation that the company will announce its inevitable IPO within weeks, perhaps before the end of this year, as previously the Facebook CEO had been reluctant to talk about taking his social networking behemoth public at all.

Now, with the company surpassing the 500 shareholder limit for private companies—a point that will force the company to disclose its financials in accordance with Securities and Exchange Commission regulations—it seems the time is right for Facebook to take the leap into the great unknown of the public market.

It’s been well-documented that Zuckerberg has long been hesitant to talk about taking Facebook public, as the socially awkward social networking giant has simply wanted to avoid the headaches and hassles of the increased regulation and scrutiny that accompanies becoming a publicly traded company.

That said, with the fact that going public seems an unavoidable inevitability coupled with the fact that many socially oriented websites have hit Wall Street with some success, it truly seems that if could be any week now that Facebook announces its IPO intentions.

To add fuel to the fire, as I mentioned Facebook has or soon will reach the maximum number of shareholders allowed for a private company, according to SEC regulations, and thus will start having to divulge its financial information in the coming months. With the threat of having to divulge all its financial information to the public anyways, perhaps Zuckerberg is finally seeing the benefits of taking his company public.

For Facebook employees, I would wager that all this IPO talk is a particular sort of sweet torture, as Nicholas Carlson from Business Insider explains,

Employees who joined before fall 2007 got real options that, when vested, turned into real stock. But they weren’t allowed to sell it on secondary markets unless they quit the company. Employees who joined after Fall 2007 had it even worse. They didn’t get real options. They got RSUs that wouldn’t become liquid until after Facebook held an initial public offering.”

In the end, even Business Insider, who broke this story, is sceptical that we’ll see any sort of IPO this year, as Facebook has yet to even choose a bank to undergird the public offering. That said, it still seems inevitable that Facebook will soon be a publicly traded company, meaning that while it won’t be cheap, we could all own a piece of the social networking giant.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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