Perhaps Facebook Inc. will go public -- if only to settle the valuation question. The social networking pioneer's indeterminate worth has come up again on Thursday, amid rumors that Facebook turned down term sheets that value it at $2 billion or $4 billion, depending on which tech blog you read.
Both figures are far below the $15 billion valuation that gets tossed around due to Microsoft Corp. (NASDAQ:MSFT)'s purchase of 1.6% of Facebook for $240 million in 2007.
More realistically, court documents indicate that Facebook values itself at $3.7 billion. The prices being paid in the secondary market for employee shares place the company's worth between $4 billion and $5 billion.
Facebook's murky valuation reared its ugly head recently when BusinessWeek reported that Facebook investor Peter Thiel said it was a factor in the company's inability to snatch up Twitter Inc. for $500 million last year. Twitter co-founders Evan Williams and Biz Stone say they want Twitter to remain independent anyway, a point reiterated by Union Square Ventures co-founder and Twitter investor Fred Wilson in an interview published Thursday by The New York Times' Bits blog.
Speaking of Wilson (pictured), he published a provocative post of his own on Thursday, concluding that with all this speculation about Facebook's financials being bandied about (including reported details, such as it may make $500 million this year and it has $200 million in cash on its balance sheet) combined with the availability of its shares on the secondary market, it may as well be public.
"I suspect that Facebook is seriously considering doing what Google did and biting the bullet and going public," writes Wilson on his popular A VC blog. "The IPO market is coming back (that's my gut). And at this point, there isn't much cost (other than finacial costs of being public) that Facebook isn't already paying."
And speaking of going public, it's a strategy some are recommending for Twitter. Entrepreneur/investor Howard Lindzon has been pushing Twitter to take the plunge for the last month. (Lindzon holds shares in Twitter through his investment in Betaworks, which picked up a stake in Twitter when it sold Summize Inc. to the microblogging service last year.)
Indeed, I can't think of anything that would heat up the IPO market faster than both Facebook and Twitter going public. Talk about sizzle. Make that shizzle, as Lindzon likes to say.
Who knows? Maybe that's what Twitter co-founder Williams was hinting about when he teased his followers that Friday will be "a very big day." Hey, a girl can dream. -- Mary Kathleen Flynn
Pipeline subscribers will find more here on the IPO market, including this week's offerings for Rosettea Stone Inc. and Bridgepont Education Inc.
Follow me on Twitter @MKFlynn.
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