Sorry! No Facebook IPO: People Need To Wait Till Mid 2012


For those who are desperately expecting Facebook IPO in early 2012, this news may disappoint them. Facebook has decided not to go public any time sooner than next year. Earlier, it was expected that Facebook will file its IPO in fourth quarter of 2011. However, in current scenario, company has decided to hold down its IPO till mid of 2012.

Recently, company has made revenue of $1.8 billions in its first half of the year 2011 and a net income of $500 million. Company is expecting to reach the landmark of $4 billion at the end of this fiscal.

Earlier in May, Facebook had been valued worth $87.5 billion in and company was expecting to raise a $100+ billion through IPO. In June it was expected that company will file the IPO in starting of 2012, however due to bad U.S debt Facebook has delayed its IPO till mid 2012.

So, what made Facebook to revamp its IPO strategy? There are certain aspects which made Facebook to stay back – atleast for some time now:

  1. 1.    Market Conditions:  The first half of the year proved to be fruitful for IPO. It’s been supposed to be the best year since 2007, but due to the downfall of U.S debt market in August twenty one IPOs have been pulled out from the market and year proves has been transformed into an ugly monster for financial market. 
  2. Motivation:  By no way Facebook CEO Mark Zuckerberg wants his human assets to get distracted due to post-IPO shuffle at higher management level. Especially at the time when company is facing the possibly the best competition ever from Google Plus, Mark prefers his employees to stay focused on core responsibilities.
  3. Money for Some:  Facebook is in no hurry to make money, since it doesn’t need capital to grow. May be facebook employees want to be rich, but facebook itself probably doesn’t need them.
  4. Disclosure Details: Company doesn’t want to disclose its details to public; once it gets files with SEC it will have to release all its details. As per the binding with SEC, Facebook will anyways have to reveal all its details by April 2012 because it has more than 500 shareholders.
  5. Clean up: Facebook needs to generate serious revenue in order to extract more investors; it doesn’t need to clean up its business model.

In all such scenario one thing is sure, Facebook IPO is going to come but just after the break of few quarters more.

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