LOS ANGELES - When Facebook makes its long-expected debut as a public company this spring, the social networking company will likely vault into the top ranks of the largest public companies in the world, on par with the likes of McDonald’s, Amazon.com, and Bank of America.
The Wall Street Journal said yesterday that Facebook is preparing to file initial paperwork for an offering that could raise as much as $10 billion and value the company at $75 billion to $100 billion. The filing with the Securities and Exchange Commission could come as early as Wednesday, with an initial public offering of stock in three or four months.
The targeted amount would slot it among the world’s 25 largest IPOs, although as recently as November 2010, General Motors raised $15.8 billion when it shed majority control by the US government.
The IPOs of 14 companies would rank higher than Facebook’s, according to investment adviser Renaissance Capital. Among them were Visa’s $17.9 billion IPO in March 2008, the largest for a US company, and world-topper Agricultural Bank of China Ltd., which raised $19.3 billion in July 2010, not including extra shares issued to meet demand.
Facebook spokesman Larry Wu said the company will not comment on IPO-related speculation. The Journal had cited unnamed people familiar with the matter.
The Journal also said that Facebook was close to picking Morgan Stanley as the lead underwriter, which would be a setback for rival Goldman Sachs. Both declined comment.
The buzz surrounding an outsized haul for Facebook’s founders, employees, and early investors remains a hopeful symbol for capital markets after a deep recession. At the reported price, Facebook’s IPO would be the biggest for a US Internet firm ever - topping the debut of one of its chief rivals, Google Inc.
“We are expecting 2012 to be a year of recovery for the IPO market led by the Facebook IPO,’’ said Kathy Smith, Renaissance Capital’s principal.
The event will follow a string of tepid debuts by technology start-ups including social game maker Zynga and discount advertiser Groupon. The stocks of both companies are just pennies above their offering prices in December and November respectively. Zynga’s stock fell 5 percent below the IPO price on its first day of trading.
Facebook’s will be the most anticipated tech IPO since Google went public in August 2004. Not including shares sold by early investors, the Internet search giant raised $1.2 billion and grabbed a market value of $23 billion, the biggest so far for a US Internet company. The IPO raised $1.9 billion, including shares sold by early investors and extra stock issued to meet the heavy demand. It is not known whether Facebook’s $10 billion target includes shares owned by early investors.
Facebook’s reported valuation of $75 billion to $100 billion compares with about $100 billion for McDonald’s Corp., $90 billion for Citigroup Inc. and Amazon.com Inc., and $75 billion for Bank of America Corp. It would exceed the market cap of $55 billion for Hewlett-Packard Co., one of the world’s largest tech companies by revenue.
Both Facebook and Google earn most of their money from advertising and are now competing to gain as much information as possible about their users to help advertisers target niche audiences.