Speculation is rising that Facebook might file for an initial public offering before the end of 2011. [1]
While valuations for the company have gone to as high as $100 billion
in private markets, an initial registration statement is all it takes
to provide a much clearer picture of how Facebook’s metrics are faring.
Registration Would Throw Much More Light on Metrics
Much like Groupon and LinkedIn, Facebook’s purported valuations have varied
considerably since the last one year. A big reason for this is an
asymmetry of information regarding Facebook’s operating metrics.
While registered users on Facebook are
visibly expanding, information on Facebook’s revenues and operating
margins is erratic at best as the company has no obligation to release
its financial data. As a result, a single figure released from a
relatively anonymous source can send the market into a flurry.
While Groupon obviously has its share of problems,
these issues came into light as the company released its first S-1
registration in June 2011. For now, Facebook seems clear of any worrying
statistics, with its user base ever expanding to over 800 million now
and revenues doubling to $1.6 billion in 1H-2011. [2]
With the success of tech IPOs in the past
few months, the company is surely considering this a ripe time to go
public. Facebook’s ubiquity and enormous influence on the internet is
sure to make this a highly anticipated event.
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