Facebook is expected to file for an initial public offering of stock tomorrow, but will only generate $5 billion.
The International Financing Review reports that social network Facebook is expected to file documents with the Securities and Exchange Commission (SEC) for an initial public offering (IPO) of sock that is expected to generate only $5 billion, not the previously reported $10 billion. This likely means that Facebook intends to start with a conservative base before deciding to increase its offering due to investor demand.
The report states that Facebook has finally chosen investment bank Morgan Stanley as the head underwriter for its IPO, followed by Goldman Sachs, Bank of America, Merrill Lynch, Barclays Capital and JP Morgan as the secondary writers. Unnamed sources close to the matter claim that the list of bookrunners could grow although an estimated timeframe was not given.
On Tuesday investment banking sources pointed out that Facebook has been "unusually guarded" about the process of selecting banks for the underwriting syndicate. They claim Morgan Stanley secured the leading role thanks to its market leading position in Internet IPOs. Facebook's choice also implies that the social website took into account Goldman Sach's handling of a private placement last year, and that it's possible the site simply wants to distance itself from the latter bank.
Facebook will likely finalize the IPO process by May if all goes well in the registration process with the SEC. Final pricing of Facebook shares will probably not be written in stone until at least three months after the IPO papers are filed. Facebook's final valuation will be determined by a variety of factors including investor demand for social media, the health of the European economy and the IPO market.
Facebook's expected valuation remains somewhere between $75 billion and $100 billion, sources claim.
$5,000,000,000 is an insane amount of money in any respect, especially for a site that doesn't offer anything truly useful to the world.
$5,000,000,000 is an insane amount of money in any respect, especially for a site that doesn't offer anything truly useful to the world.
yes, by looking at the media history, I predict it'll go the way of myspace
Oh dear, I wonder how they will cope without that extra 5B? Times are hard you know.
F***, I would love to have 0.1% of that.
I hope so.
Holy cow! That's a lot of socks!
Agreed.
It's actually 20 times worse than you think, LOL. They actually valued it at $100B. The $5B is not for the whole thing, it's just for 5% of it.
Facebook is just a fad, and a fad that can end at anytime.
Sure right now it's riding the high and might wave of popularity which generates awesome advertizing revenue. But lets say tomorrow everyone decideds to use google+ instead. Facebook would only be worth the value of thier physical assets and cash. I highly doubt they have that much in phisical assets and cash combined. The current valuation of facebook being worth something like $130 billion. These valuations are very odd to me and make me think of that tech bubble that popped in the 90's. Basically if tomorrow everyone left facebook they wouldn't be left with $130 billion dollar business. Which makes me think that the value is also based on possible future income. That kind of accounting is what put us in this mess in the first place.