Facebook IPO at $100 Billion Amid Alleged User Loss?

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By Subodh S. Lal, Christian Post Contributor
June 13, 2011|11:43 pm

Facebook remains tightlipped over reports that based on valuation of $100 billion it is planning an initial public offering (IPO) as early as April 2012.

However, Facebook lost no time in dismissing other reports that the social-networking giant is losing users, most notably in the U.S.A., Canada as well as the U.K., the so-called early-adopter countries.

CNET reported Monday that Facebook, which is expected to cross the 500-investor threshold this year, will be required to go public in compliance with a section of the 1934 Securities and Exchange Act known as “the 500 rule.”

According to this rule, when a privately owned company has more than 500 investors, it is mandatory for it to start releasing its quarterly financial information to the Security and Exchange Commission (SEC), just like any public company.

The company is also facing pressure from employees to go public, so that they can sell their stocks in the open market.

However, what really makes everyone sit up and take notice of this development is the valuation of the company at $100 billion, which, according to CNET, makes Facebook one of the biggest companies in the technology industry. Apple, the top company in the market, is currently valued at more than $300 billion. Microsoft's market capitalization stands at nearly $203 billion, while Google is valued at $162 billion. At $100 billion, Facebook would be worth more than Cisco, Hewlett-Packard, Canon, and a slew of other firms.

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Facebook is by far the most popular social networking site with close to 687 million users.

But all may not be so well with this prospective fairy tale for the future shareholders.

Inside Facebook, a tracking company, confirms that Facebook is set to reach 700 million users mark; it also points to a trend that may ruffle Mark Zuckerberg and Co.

The United States lost nearly 6 million users, falling from 155.2 million at the start of May to 149.4 million at the end of it. This is the first time the country has lost users in the past year. Canada also fell significantly, by 1.52 million down to 16.6 million, although it has been fluctuating around that number for the past year. Meanwhile, the United Kingdom, Norway and Russia all posted losses of more than 100,000. If these countries - most of whom had adopted Facebook many years ago - had not lost users, and instead posted even small gains, Facebook would have had a much more typical month, Inside Facebook reported Sunday on its website.

By the time Facebook reaches around 50% of the total population in a given country (plus or minus, depending on internet access rates in that country), growth generally slows to a halt, noted Inside Facebook.

Facebook was quick to dismiss this “incorrect story about its growth.”

U.K.’s Guardian quotes a statement from Facebook: “From time to time, we see stories about Facebook losing users in some regions … Some of these reports use data extracted from our advertising tool, which provides broad estimates on the reach of Facebook ads and isn’t designed to be a source for tracking the overall growth of Facebook.

“We are very pleased with our growth and with the way people are engaged with Facebook. More than 50% of our active users log on to Facebook in any given day.”

Facebook is indeed growing in Latin American countries of Brazil and Mexico. Though to reach the 1 billion mark, a goal set by the CEO Zuckerberg a year back, it must make inroads into China and Russia.

 

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