Facebook halts private stock trading in move toward IPO

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Facebook halts private stock trading in move toward IPO

Warwick Ashford

Facebook will take another step towards its planned initial public offering (IPO) of shares when it halts trade of its stock on private secondary markets at the end of this week.

This will pave the way for the social networking firm to finalise its shareholder list and make other final preparations for its IPO, expected in May.

Facebook filed plans for an IPO of $5bn worth of shares in February, but analysts said the figure would change as the company's financial advisors gauged investor demand.

At $5bn, the IPO would be the highest for an internet company since Google raised $1.67bn in 1994. But now the IPO is expected to be one of the largest ever with some estimates putting a $100bn valuation on the company, according to the BBC.

Reports say although Facebook is aiming to go public in May, the timing will depend on the US Securities and Exchange Commission, which called for minor revisions to the company’s original IPO registration forms.

Facebook has since filed two amendments, including updated warnings about a patent lawsuit Yahoo filed against Facebook earlier this month; updated metrics about its users and engagement; and details of a new line of credit worth $5bn and a bridge loan of $3bn, to cover the costs of its employees selling company shares.

The initial IPO registration forms revealed for the first time that Facebook made a profit of $1bn in 2011 from revenues of $3.71bn; that founder Mark Zuckerberg owns 28.4% of the company; and that the network now has 845 million monthly users and 443 million daily users.

This shows Facebook has been growing rapidly and profitably, with revenues increasing fivefold in the past two years. As a private company, Facebook had never before had to publish accounts showing how much profit it made.

For the IPO, investment bank Morgan Stanley will act as lead underwriter, with Goldman Sachs and JP Morgan and others taking secondary positions.


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