Social media giant Facebook will probably file papers with the
Securities Exchange Commission for an initial public offering this
week, according to anonymous sources.
The Wall Street Journal
cited "people familiar with the matter," a familiar term in
financial journalism that likely indicates sources within either
Facebook itself or in Morgan Stanley (
). The Journal reported that the
will probably act as 'lead left' on the
, occupying the eponymous upper-left hand spot on the prospectus.
Facebook's IPO remains the most eagerly awaited filing of the past
several years; early estimates suggest that the social network
could raise around $10 billion in the event, giving the company a
potential value of up to $100 billion. Google, for comparison,
of about $188.6 billion.
The IPO comes after several other high-profile social media and
web-based firms went public, with investors treating the debuts of
) and Zynga (
) as a kind of dry run for the big filing. LinkedIn has a far
smaller - though more closely targeted - user base than Mark
Zuckerberg's firm, and its shares haven't performed terribly well
since they went public last May, dropping 18.7 percent in that
time. However, last month saw a 20 percent increase in the
value of the
-oriented network, pushing the
Zynga, which produces the incredibly popular online games
Farmville, Cityville, Mafia Wars and Words With Friends, actually
has a deep symbiotic relationship with Facebook, the platform for
all of its biggest hits. In turn, Zynga chief executive officer
Mark Pincus drives a fair amount of traffic to Facebook,
though it's safe to say that while the latter could survive without
the former, the opposite probably isn't true.
Down on Wall Street, Morgan Stanley executives will surely be
crowing if they do get the coveted lead left spot over rival
Goldman Sachs (
), the firm many assumed would take charge of this offering.
However, Lloyd Blankfein's company will likely play a role
alongside James Gorman's - with a $10 billion offering, most of
Wall Street will get a slice of the IPO pie.
The most serious question facing Zuckerberg & Co. is how
much growth remains for Facebook, and what form that growth will
take. Compared to one of its biggest peers, Google (
), Facebook's filing will take place somewhat later in the
corporate life cycle. Larry Page and Sergey Brin founded Google in
1998, taking the company public six years later in 2004 - well
after the collapse of the dot-com bubble - with Morgan Stanley and
) as underwriters in a "Dutch auction." Mark Zuckerberg founded
Facebook eight years ago, and the network is far more famous - and
its IPO far more widely anticipated - than Google was at the time
of its own offering.
With appetites running high for the biggest name in social media to
go public, bullish spirits could push the IPO to an extremely high
valuation. In turn, investors might see a sharp day-one drop if
many choose to cash out quickly. While Facebook definitely
represents one of the great success stories of the Web 2.0
, a quick rush into the stock should end up creating more than a
few cases of buyer's remorse.
While Zynga's filing is different in a number of key ways, its
first-day pop offers an object lesson for cautious investors. The
gaming company went public at $10 per share, spiked early in the
day and then dropped off to below its initial price. It took the
better part of two months to recover - so those who got in on the
IPO and sold quickly made their cut, while retail investors buying
on the first day after the IPO definitely got burned.
Facebook should be a major player on the web and in the
for a long time. The tough question is when the best time to buy in
will come - or whether that time has already passed.
As of Sunday, it's not known whether Facebook will list on NASDAQ
, or what its
symbol will be (although BOOK would be nice and simple).
?Disclosure: The author is long Zynga (