With IPO, Facebook’s Valuation Could Reach $100 Billion
After months of increasingly frenzied speculation, social networking juggernaut Facebook filed registration documents with the Securities and Exchange Commission for an initial public offering on Wednesday. Although the company said it aims $5 billion, that number could rise as high as $10 billion, depending on investor demand. Facebook’s public debut, which caps a meteoric rise to the top of the tech world, would be the largest Internet IPO in history.
Facebook is currently trading at a valuation of $89.4 billion on Sharespost, a private market, but the company could be worth as much as $100 billion or more after the IPO, once public investors get a chance to buy a piece of the company for the first time. That would make its market capitalization greater than than iconic American companies like McDonald’s, Citigroup, and Kraft Foods. It would also turn founder and CEO Mark Zuckerberg into one of the richest people in the world, with an estimated net worth of well over $20 billion.
Facebook is one of the most dramatic Internet success stories of the decade since the first dot-com bubble crashed. Zuckerberg, who launched the company from his dorm room at Harvard eight years ago, has been able to synthesize two powerful trends: the network effect of millions of people connected to each other by the Internet, and the increasingly sophisticated practice of targeted advertising. It’s been years since the company had a any real competition — Friendster and MySpace have been vanquished, while Google’s social efforts are only starting to bear fruit. As a result, Facebook has become a truly massive — and quite unique — web platform that serves as the primary vehicle for an ever-increasing amount of web activity and commerce.