Facebook will launch its long-awaited and rumored IPO sometime between April and June 2012, according to a report from the Wall Street Journal. Facebook will aim to raise $10 billion in capital, an amount that would value the company at $100 billion – a staggering amount that is more than 2-times the current value of Hewlett-Packard, a blue-chip tech company.
CEO Mark Zuckerberg has resisted an IPO for several years, instead focusing on making the rapidly growing company the top social networking website on the internet, and more importantly, profitable. His efforts have been immensely successful, as Facebook is on track to pull in over $4 billion in revenue for 2011, an amount greater than Yahoo!, one of the first internet companies to exist. Since Facebook is a private company it is not required to release earnings, though after pulling in over $4 billion in revenue and employing a workforce of only ~3,000, the company is almost certainly earning a hefty profit.
This development is key to investors in deciding whether to purchase Facebook stock. A myriad of Web 2.0 companies, such as Pandora, LinkedIn, Angie’s List, and most recently, Groupon, have launched their IPOs in 2011, though all of them are currently running in the red. Groupon, the largest of those companies, is bleeding through hundreds of millions of dollars per year, and its stock price is down 42% from its IPO price in just one month. Facebook, on the other hand, brings in much more revenue, has an enormous user active user base, and appears to be stable internet destination – a strong point when considering the fickle nature of internet users (seriously, when’s the last time you watched an Epic Meal Time video?).
Nevertheless, despite all of those appealing features of Facebook for investors, their $10 billion IPO is still quite unprecedented – only 13 other companies have ever filed an IPO that large, and just three of those have been U.S. based. However, if Facebook’s growth continues at a blistering pace – both in total users and more importantly, advertising revenue marketshare – it could be the one Web 2.0 company actually worth investing in. How good an investment option Facebook will be depends on the public release of its financial information, which should occur sometime in April 2012.