Leaked Document Says Facebook May Offer Stock

An initial public offering of stock for Facebook is being planned, a leaked document indicates, and rumors put the IPO in 2012. Facebook plans to boost the number of its shareholders above 500 this year, the document says. And rumors have other social networks, including LinkedIn, Groupon and Twitter, going public before Facebook.

Is Facebook planning an initial public offering (IPO) of stock? It appears that way in the wake of a leaked 100-page document sent to possible investors. Rumors are now churning that the world's most popular social network will take itself public in 2012.

Facebook plans to boost the number of its shareholders above 500 this year, the document says. When that happens, the company will have to start disclosing mountains of financial information or go public by April 2012.
Goldman Sachs and Digital Sky just invested a combined $500 million into Facebook earlier this week, The New York Times reported. That set the stage to bring in heavyweight executives who could help position the company for an IPO. The Times also reported that Goldman is raising $1.5 million from wealthy clients for Facebook.
Facebook and Goldman Sachs weren't immediately available for comment, but Facebook CEO Mark Zuckerberg has been slow to acknowledge any desire to go public. In November, he told an audience at an industry conference, "Don't hold your breath." But with this week's revelations, it seems more likely that an IPO is in the near future.
A Slew of IPOs?
Meanwhile, LinkedIn appears poised to take its business social network to the public markets. Reuters reports that LinkedIn is planning an IPO in 2011. In fact, the company has reportedly already chosen underwriters for the deal.
Although Morgan Stanley, Bank of America, and JPMorgan have been named among the banks that will be involved in the transaction, LinkedIn has made no official announcement. LinkedIn could not immediately be reached for comment, but a company spokesperson told Reuters that "An IPO is just one of many tactics that we could consider."
"If Facebook went public before LinkedIn, do you think anyone would pay that much attention to LinkedIn? You might want to surpass the beast," another source told Reuters on Wednesday.
There also remains speculation about Groupon. There were rumors that Google was willing to pay $1 billion for the daily-deals social site. But now there is talk that Groupon may go public. There are even rumors that Twitter and Zynga are looking at a possible IPO. If those deals come through, it would be the year of the social-media IPO, but so far it's just talk.
The Secondary Market
"What's changed is this secondary market for shares that has emerged over the last few years. It's almost a shadow stock market where insiders can sell their stock without going public," said Michael Gartenberg, an analyst at Gartner. "One of the main reasons why you want to go public if you are a founder is liquidity."
As Gartenberg sees it, the private-capital deals around Facebook and Twitter take away a lot of the incentive for founders and insiders to sell because they are already gaining some liquidity without having to go through the hassle of reporting financials.
"Now that you have a secondary set of shares, Facebook has a valuation of $50 billion. It has a set share price, and people are trading on those shares on those prices. Because of that, how much will we see the normal IPO results that happen with stocks going wild? That's another interesting question," Gartenberg said. "We haven't seen a flashy IPO since these secondary markets for private stocks have gone online. So it's going to be an interesting year."