FEBRUARY 1 2012 23:13h
Facebook's IPO may have users in mind
With 800 million users, which Facebook says will reach 1 billion by the end of the year, it is arguable that Facebook's success is a grassroots phenomenon. But a soon-to-be initial public stock offering, which several news outlets have reported, may overlook the common user unless Facebook structures its IPO in a way that allows them access to their shares on the opening day.
The online social network was to file for a $5 billion public stock offering with U.S. securities regulators Wednesday, several news outlets said.
The filing -- half the $10 billion most analysts earlier estimated -- is a starting point Facebook has said could ultimately value the company at $75 billion to $100 billion.
That valuation would be one of the largest initial public offerings in U.S. history, CNBC reported.
The vast online social network was founded by entrepreneurial computer programmer Mark Zuckerberg with college friends in a Harvard dorm room. They launched it Feb. 4, 2004, almost eight years to the day before Wednesday's SEC filing.
But some said the 800 million users present Facebook with a dilemma. Will Facebook pay tribute to its vast army of users by allowing any of the common folk to buy a piece of the company when it goes public?
Some said yes.
"I guess there will be somewhat of an altruistic tone to the structure of the deal," David Menlow, president of IPOfinacial.com, told the Los Angeles Times.
"It's important for people who are Facebook users to at least have a priority in getting shares," he said.
Details of this kind may not be known until Facebook's SEC filing is in.
The actual offering is expected to take place in late May, International Financing Review and The New York Times reported.
Facebook was privately trading at $35.50 a share Tuesday at an implied valuation of $83.5 billion, the SharesPost private market for venture-backed private companies said.
By contrast, the privately held Twitter online social networking and microblogging service traded at $18.50 a share, with an implied valuation of $9.8 billion to $10.6 billion, SharesPost said.
The U.S. Securities and Exchange Commission will scrutinize Facebook's financial statements and potential public market investors will get a chance to see Facebook's books for the first time.
Facebook gave the Morgan Stanley financial-services firm the lead role in the public offering, letting it occupy the highly desirable "lead left" slot on the IPO prospectus, IFR reported.
That position means Morgan Stanley's name will appear in the upper-left-hand corner of the prospectus. It also typically means Morgan will receive higher fees than the other underwriting banks, Time magazine said.
The other banks are Goldman Sachs Group, Bank of America's Merrill Lynch wealth-management division, Barclays Capital and JPMorgan Chase, IFR said.
Morgan's experience in arranging major Internet IPOs -- including for the Groupon deal-of-the-day Web site and the Zynga social-network game developer -- helped it win the top spot after an unusually secretive selection process, IFR said.
Morgan may have also won out because Facebook was displeased with Goldman's botched $1.5 billion private placement in the company's shares in January 2011, in which the bank ran afoul of SEC rules and was forced to close the offering off to U.S. investors, Time said, citing previous reports.
Facebook has become the No. 1 U.S. place for online display advertising, with 28 percent of all online display ads, the comScore market research firm says. Yahoo is No. 2, with less than half that share.
WASHINGTON, Feb. 1 (UPI) -- Speculators are wondering if U.S. social networking Web site Facebook's reported initial public offering will offer the little guy a piece of the action.