Friends With $100Bn Benefits: Facebook Value Skyrockets

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It started out as a half drunken project in Harvard’s back dorms but could soon be one of the most valued companies in the world. Facebook is now valued at a whopping US$100 bn when it files for Initial Public Offering before 30 April 2012, inside sources have told Wall Street Journal.

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Who would have thought friends would mean so much?

And this hundred-billion dollar bonanza is set to happen once Mark Zuckerberg’s brainchild exceeds 500 shareholders, the ‘500 rule’ (as stipulated by US regulations) at which point it is obliged to go public, later this year.

If this grandiose figure is realised, it would make Google’s $1.9bn floatation in 2004 look like small change, putting The Social Network with its 800 million friends even ahead of Amazon’s mammoth $87.4bn value when it went public.

But its not all champagne and celebrations once the IPO goes live, as flotations can quickly go sour, if LinkedIn and Groupon’s experiences are anything to go by.

LinkedIn’s recent IPO saw the social network for professionals lovingly embraced by investors when it kicked off late last month, with first day trading shares soaring to a whopping $83 – double its initial $45 price – pushing its total value to $9bn, only to later flop to record lows for any technology company.

Shares have fallen 36% since its flotation on May 12th.

Groupon, who went public just earlier this month, also enjoyed one of the most successful IPOs since Google, but has also  experienced a dramatic reversal of its fortunes on the trading floor, of late, with shares now falling to $15.24 on Monday, below IPO price range of $16 to $18, and almost half of initial trading price of $30, according to Beacon Equity Research.

Its shares have tanked 42%, in total.

Read: Facebook: To IPO Or Not?

But is Zuckerberg worried about what a flotation may bring? Apparently not.

“Honestly, it’s not something I spend a lot of time on a day-to-day basis thinking about now,” Facebook CEO declared in an interview earlier this month.

Zuckerberg talked casually of the of a float “in a liquid kind of way” although did add the benefits it would bring the network, which recently made a reported profit for the first six months of 2011 of $1.6bn – double last year’s figure, according to Reuters.

“You get people who join the company for the mission. And one of the ways that you can do that is you compensate people with equity or options,” he said. 

 

And the Facebook founder and CEO will be very liquid himself if the $100bn sum comes to pass – and could be up for a windfall of $24 billion reports suggest – making him wealthier than Google founders Larry Page and Sergey Brin, who are each worth $19.8 billion, according to SiliconValley.com.

However, the Harvard drop-out wont be the only to benefit – Facebook employees will also have reason to celebrate with a 30% stake, as will third party investors like Sean Parker (CEO of Napster), Dustin Moskovitz (former Facebook CTO) and Digital Sky Tecnologies. Microsoft also owns a 1% stake.

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