Facebook will one day go public. When? No one knows — but that doesn’t stop journalists from breathlessly reporting as news every tidbit indicating that Facebook will for-reals-and-trues IPO [circle one: soon/not soon/any minute!!1!/never oh God we’re doomed].
Here’s the rumor cycle from just 2011:
January: WSJ runs “Facebook Sets Stage for IPO Next Year,” reports that the company “gave the clearest sign yet that it is preparing to take itself public sometime next year.” That sign: Facebook told investors it was about to hit the milestone of having more than 500 shareholders, which means it will need to start filing public financial reports — whether or not it IPOs — by April 2012.
At that point, most companies choose to just file their IPO paperwork. So, since way back in January, it’s been clear that Facebook will probably file its S1 by Q1 2012.
Late January: Facebook closes a $1.5 billion funding round that values the company at $50 billion. That’s the last formal valuation Facebook has had — everything since has been based on private deals and thin secondary market trading.
June: CNBC reports that Facebook is “likely to go public by the first quarter of 2012,” at a valuation that sources say “could be pegged at north of $100 billion.”
Mid-June: Lawmakers start toying with the idea of expanding or scrapping the 500 shareholder limit. Chatter ensues about whether that could happen in time to keep Facebook’s financial data from coming out in 2012. Which means … Facebook could stay private forever! Eek!
September: FT announces that “Facebook puts off IPO until late 2012.” It says that “people close to the company” say Mark Zuckerberg wants to “keep employees focused on product developments rather than a pay-out.”
November: Zuck tells Charlie Rose that an IPO is “not something I spend a lot of time on a day-to-day basis thinking about.” Facebook will one day make its shares liquid, but “the promise isn’t that we’re going to do it on any kind of short-term time horizon,” he says.
Late November: WSJ announces that “Facebook targets huge IPO" and says the company is "now targeting a time frame of April to June 2012." (take *that*, FT!) It is “exploring” raising $10 billion in a deal that “might” include a $100 billion valuation.
Our view: Remember those reports from June about how Groupon’s IPO “could value the e-commerce company at as much as $20 billion” (WSJ) or “roughly $30 billion” (NYT)? Fast forward to November, when Groupon IPO’d with a $13 billion valuation. It’s now down to around $10 billion.
Any valuation Facebook is kicking around now is likely to be irrelevant six months from now.
What is Facebook worth? We’ll find out when the IPO paperwork lands (which we’d bet heavily on being right around April) and sheds some light on the company’s financials. Until then, expect to keep seeing breathless “Facebook IPO is coming!” headlines every few weeks. It’s the new “Verizon is going to get the iPhone!" -Stacy