The company is discussing a valuation of $75 billion to $100 billion, said two people, who asked not to be identified because the plans haven’t been made public. Timing for the filing is still being discussed and may change, they said.
The IPO would provide funds to help Facebook maintain its expansion and fend off competition from Internet rivals such as Google Inc. (GOOG) and Twitter Inc. The company has discussed raising $10 billion in the offering, a person familiar with the matter said in November. Facebook may set its price at the low end of the valuation range to entice investors and ensure the stock rises after the IPO, said Anupam Palit, an analyst at GreenCrest Capital Management LLC in New York.
“They might discount it a little bit in order to make sure the first couple days of trading are very strong,” he said.
Facebook is close to hiring Morgan Stanley to handle the deal, and Goldman Sachs Group Inc. (GS) will probably play a “major role” in the IPO, the Wall Street Journal said yesterday. The newspaper was first to report that Facebook may file its paperwork as early as next week.
Larry Yu, a spokesman for Menlo Park, California-based Facebook, declined to comment, as did representatives of Goldman Sachs and Morgan Stanley (MS), both based in New York.
Shareholders of Facebook faced a three-day suspension of trading on secondary markets that lasted through yesterday, people with knowledge of the matter said this week. While buy and sell orders could be made, transactions wouldn’t be processed by Facebook’s attorneys at Fenwick & West LLC, the people said.
Halting the trading, which had allowed employees and early stakeholders to buy and sell shares, didn’t mean the filing is imminent, the people said. Still, some companies suspend trading ahead of a filing to make sure that investors can’t exchange shares until all of the information is public, said Sam Hamadeh, chief executive officer of New York-based PrivCo.
A trading halt also may represent an effort by private companies to ascertain how many shareholders they have.
Co-founded by Mark Zuckerberg in 2004 in a Harvard University dorm room, Facebook has amassed more than 800 million users with an easy-to-use website that lets anyone with an Internet connection construct profile pages, post video and photos and interact with friends. The company has nudged aside competitors such as MySpace Inc. and generates sales from advertisers as varied as AT&T Inc. (T), Best Buy Co. and Sony Corp.
Facebook would follow a flurry of social-media companies holding IPOs in 2011, the biggest year for U.S. Internet offerings in more than a decade, according to data compiled by Bloomberg. Nineteen companies raised $6.6 billion in 2011 — the most since 2000, when 101 businesses raised $11 billion. Professional-networking site LinkedIn Corp., music-streaming service Pandora Media Inc., (P) daily-deal site Groupon Inc. and social-gaming company Zynga Inc. all sold shares last year.
Facebook expects to be required by U.S. regulators to disclose financial results by April 30, if it doesn’t go public by then, the company said last year when it announced an investment from Goldman Sachs and other backers. The $1.5 billion investment valued the company at $50 billion.
Facebook decided to wait until 2012 for its IPO to give Zuckerberg more time to gain users and boost sales, people familiar with the matter said in 2010.