Facebook Stock Ready for IPO

in Investing Trade by Travis — January 17, 2012 at 3:38 pm | 3 comments

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The long awaited Facebook IPO may soon become a reality. Rumors have been flying around off and on for the past couple of years on when and for how much the Facebook stock IPO will bring. If you are interested in buying the stock ahead of its potential Spring IPO, there are routes to take to buy Facebook stock before the IPO. But for many investors, they will have to simply wait for the announcement. The good news for those looking to invest in the social networking company is they may have its hands tied to when it must go public due to Security and Exchange Commission (SEC) rules mandating a limited number of private investors, thus leading to the IPO sooner rather than later.

The report came out from AllThingsD, and while they did not name sources, the article writer Kara Swisher states, “According to multiple sources…” and “The usual caveat on the late-May timing (even though I called 143 people on this one): This IPO planning could all change, in a New York minute, to another month.” With this being the largest and most-hyped IPO since Google, surely, there will be more reports coming out in the coming weeks and months as to Facebook’s intentions. If the report holds to be true, Facebook stock would need to file with the SEC in the coming weeks to plan for a May IPO date. This is due to the 2-4 month processing time it usually takes the SEC to complete the necessary paperwork.

Swisher brings up a valid point of everything changing rather quickly. Groupon, for example, filed its IPO, but did not go public until nearly 6 months later. Issues such as scrutiny and proper financial records must all being lined up correctly and can easily delay the Facebook stock offering. Further, with all the turmoil going on in Europe, the stock market could be at a tipping point. If the markets were to collapse or experience a major downturn, no doubt Facebook would delay the IPO until a better market opportunity presents itself.

Speculation puts the valuation of the social networking company around $100 billion meaning they would raise about $10 billion. Not a bad pay day. However, many experts feel Facebook stock could already be priced out due to the constant exchange of shares on the private market via SecondMarket and SharesPost. The secondary market pricing has somewhat subsided with a valuation of around $80 billion (according to the latest data from SharesPost). Both Groupon and Zynga have experienced this phenomena with their recent IPOs. Much speculation and sales took place pre-IPO, only to see the respective stock prices fall flat as time went on. But with the hype and casual investors wanting to get in on the action, the Facebook stock could easily be pushed up over the $80 billion mark with simple supply and demand of the stock.

Lastly, Google is a major competitor to keep in mind with all of the Facebook IPO talk. With increasing pressure in both the social networking space as well as in search, Facebook will want to keep ahead of Google. Facebook currently has over 800 million users and is on track to hit a billion sometime this year, but with the recent success of Google Plus, Facebook will want to avoid saturation and churn. Further, Google recently announced the integration of Google Plus into search to give relevant search information to its user based on their social connections. This will only further the need for Facebook to stay completive within search as well.

Related posts:

1. 6 Ways to Buy Stock in Facebook before the IPO
2. The Tech Bubble is Back! Groupon and Pandora IPO Ready
3. Why Google should fear Facebook adding a Search Engine
4. 10 Highest Dividend Stocks that Protect against Inflation
5. Social Search is Here: Bing and Facebook Like Intergration

Tags: facebook investing ipo trade