Facebook’s Potential Fall IPO Filing Will Provide Insight on Needed Valuation Metrics

Speculation is rising that Facebook might file for an IPO before 2012 itself. ^[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. Facebook leads in the global social networking arena, competing with the likes of Google (NASDAQ:GOOG), LinkedIn (NASDAQ:LNKD) and MySpace.

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Registration Would Throw Much More Light on Metrics

Much like Groupon (NASDAQ:GRPN) and LinkedIn (NYSE:LNKD), Facebook’s purported valuations have varied considerably since the last 1 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 IPO’s 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.

We currently value Facebook at around $45 billion.

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1. ZDNet: Facebook may IPO next month [↩]
2. Reuters: Facebook Doubles First half Revenue [↩]