Facebook IPO Could Come Next Week; Investors To See Ridiculous Windfall

Jesse Eisenberg, as Facebook co-founder Mark Zuckerberg, and actor Justin Timberlake, as Napster founder Sean Parker, chat over drinks at a San Francisco nightclub in the oddly enthralling movie "The Social Network."

Over the next few days, Facebook could file an IPO. Raising as much as $10 billion at a valuation anywhere between $75 billion to $100 billion, it stands to be "one of the biggest-ever U.S. public debuts." What does this mean for investors of the social media mammoth? It means they will make disgusting amounts of money. Lots of it. More than you could possibly imagine. Citing anonymous sources, the Wall Street Journal reports:

Greylock Partners and Meritech Capital Partners, which invested around $12.5 million each in Facebook in 2006 when the company was valued at around $500 million, would also reap significant returns of around 200 times that would put their stakes in the social network at more than $1.5 billion, said people familiar with the matter. Neither venture firm has reduced its shares in Facebook, said these people, with Meritech having added to its holdings several years ago.

But that's not all. Palo Alto-based venture-capital firm Accel Partner could make "unprecedented" returns if and when Facebook lets loose with their initial public offering. WSJ goes on to point out:

Chief among the beneficiaries would be Palo Alto, Calif., venture-capital firm Accel Partners, which invested $12.7 million in Facebook in 2005 when the company was priced around $100 million. While Accel has since sold a small percentage of its Facebook shares, it could still reap around a 1,000 times return, with its stake potentially worth as high as $9 billion (taking into account dilution and other factors), said people familiar with the matter.
The colossal likely returns from a Facebook IPO—particularly Accel's nearly 1,000 times return and $9 billion potential payday—would be unprecedented in the venture industry, said venture experts. Such returns would exceed those of Google Inc.'s 2004 IPO, when the Web-search company's early venture investors Sequoia Capital and Kleiner Perkins Caufield & Byers, which each put $12.5 million into the start-up, saw their investments swell to around $2 billion.

Now with more than 800 million users, Facebook is one of the fastest growing companies in the world. If the Facebook IPO comes to fruition, according to Forbes, it is "widely expected to be one of the biggest in recent years, if not the biggest ever." Brace yourselves.

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By Brock Keeling in News on January 27, 2012 2:15 PM 0 Comments

Comments [rss]

Mark 2000

Good luck with that. Still loving how Zynga is still worth less, on average, than the price per stock it opened with two months ago. Enjoy your new bubble, rich people.

GG

Price "per stock" (sic) relative to IPO price has pretty much zero relationship to a company's health/growth/investment prospects, but then again there's at least 3 points in that comment that demonstrate that you don't know what you're talking about. I don't care about Zynga (or Facebook, for that matter), but I *do* find it irritating when people expound upon the stock market and/or the economy without feeling the need to educate themselves on the topic in the slightest.

Mark 2000

LOL, sure thing, Mr. Economist.

BombaySplashVermouth

Yeah, sure. Give me Gopher again and I will rule the unterweld.

GG

FYI, "file an IPO" isn't accurate. What I assume is that they are preparing to possibly file the first draft of their S-1 Feb. 1, which starts a process by which they are eventually cleared by the SEC to start trading their shares on the public market, probably 6 months or so from now (depending on the SEC's review and additional info they decide that Facebook needs to disclose before the IPO).

JC

You're right that this filing doesn't mean the actual IPO will take place next week. Facebook hasn't even picked an underwriter yet. So the headline is completely wrong and the correct description of what's happening is "filing FOR an IPO" (i.e. filing the preliminary documents you described) not "filing an IPO." But then again, if you get your financial news from SFist you're probably not in a position to take advantage of this development anyway.

The Ugly American

Oh noes! ...rich people investing in companies and making money!!

OMG the horror ...MAKE IT STOP!!!

Katy

You came all the way up here to SFist to make that lame-ass comment? Sit back and let our own conservatives show you how it's done.

JC

In all fairness, it's hard to see the point of this post other than fanning class envy. As an analysis of capital markets, it's worth less than what we're paying to read it. And the fact that they cross-posted this on the national Istaverse is embarrasing for SFist.

HStreetLandlord

Yeah, I'm sure no one is interested in the website that's used by more than 800 million people (but not me!) is possibly going to do file for an IPO next week.

How is this fanning class envy? I'm sure almost all readers are aware that getting lucky with an investment like this is not a normal occurrence and the story is quite interesting.

I'm curious how much Microsoft's stake will be worth.

JC

This post is not telling you shit about the deal. On the other hand, it does take a gratuitous potshot at so-called "windfall profits."

HStreetLandlord

I don't think there was any negative sentiment regarding the profits. And this is a once in a generation type of profit - quite noteworthy. Many, many VC investors lose their shirt - making this quite worth highlighting when they basically hit the lotto.