After months of speculation, it appears that social networking behemoth Facebook could be going public as soon as the first quarter of 2012, CNBC is reporting. Sources close to the matter say that the company’s value is in the upwards of US$100 billion.
While Facebook officials have declined to comment on the IPO, CNBC says that the IPO is set in motion because of a law from the 1934 Securities and Exchange Act that orders that once a private company has more than 500 investors, it must begin releasing quarterly financial information to the Securities and Exchange Commission like public companies.
Palo Alto, California-based Facebook has indeed revealed that it expects to pass the 500-investor mark this year. The company will likely launch a formal IPO in advance of a public-company reporting obligation that would begin in next April, sources told CNBC.
Those sources also say that the desire to increase employee compensation is part of the motive behind the IPO. “Early last year, Facebook put curbs on employees’ ability to sell their company shares privately to other investors—a move that may now be prompting employees to quit Facebook in order to be able to monetize their shares,” CNBC said. Should and when Facebook goes public, its employees will be able to sell their shares on the open market and cash in on their holdings.
Facebook is among a group of major social media platforms that are moving ahead with going public. Business networking site LinkedIn more than doubled its IPO price last month in its first day of trading. Free music listening site Pandora is going public, and discount site Groupon is looking to raise as much as US$750 million.