Report: Facebook delays IPO until late 2012
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Facebook is putting off its initial public offering until late 2012.
People familiar with the company told the Financial Times that Facebook founder and CEO Mark Zuckerberg wants employees to focus on developing products for the world’s most popular social networking site rather than on collecting an IPO payout.
These people said Facebook was not postponing the IPO because of turbulent market conditions, which have discouraged other Internet companies such as Groupon and Zynga. In all, there are more than 200 companies in the IPO pipeline, which has come to a standstill as companies wait for the markets to settle.
Facebook spokesman Larry Yu said in an emailed statement: ‘As is our typical practice, we just don’t get into speculation about an IPO.’
Scott Sweet, managing director of research firm IPOBoutique.com, said Facebook’s is one of the most highly anticipated IPOs.
‘When they file this, there will be pandemonium, absolute pandemonium, whether they do it in April, May, June or tomorrow,’ Sweet said.
Facebook has become the ‘it’ company for investors who have pushed its valuation to roughly $80 billion in the private markets. Facebook board member Peter Thiel said last year that Facebook would consider going public in 2012.
‘It’s a consumer-facing company, which makes it very interesting to people. People can relate to it,’ Thiel told the Los Angeles Times in an interview last year. ‘It’s somewhat of a unique thing. There is a lot of intensity surrounding it.’
Driving that intensity is the moneymaking potential of the site, which boasts more than 750 million users. The company has raised nearly $1 billion without tapping the public markets, and that has pent up demand from investors similar to the frenzy surrounding the 2004 initial public offering of Google.
Zuckerberg has deferred going public for as long as possible, a decision that Thiel supports. He compared Zuckerberg to an artist working on his chef-d’oeuvre with none of the distractions that running a public company bring.
‘Mark is just doing what he has been doing for years, trying to figure out what the best new products to build are,’ Thiel said last year.
A Facebook IPO was expected by April 2012. The Securities and Exchange Commission forces companies that have more than 500 shareholders to make public some of their financial results in the first quarter of the following year. Facebook surpassed 500 shareholders in January when investment bank Goldman Sachs became an investor. Goldman Sachs and Digital Sky Technologies, a Russian Internet investment firm, invested a combined $500 million in the privately held company.
Google had a similar strategy. It waited nearly six years to go public. The Internet search giant filed its first financial statement in April 2004 and went public the following August.
According to the Financial Times, Facebook’s revenue is in the range of $2 billion a year. A report last week from Reuters said the company had doubled its revenue to $1.6 billion in the first half of 2011.
The IPO delay may not thrill employees, Sweet said, but they have little to worry about.
‘One can be sure that once Facebook does come out, they will be very wealthy individuals,’ he said.
-- Jessica Guynn