According to a report from CNBC, Facebook is planning a Q1 2012 IPO which could be “pegged at north of $100 billion.” The social networking company’s IPO may be triggered by a section of the Securities and Exchange Act known as “the 500 rule,” which states that a private company with over 500 investors must begin to release quarterly financial information to the SEC, just as public companies do, CNBC explains.
This news comes alongside a second report, which states that Facebook’s growth is slowing down in certain key markets, including the U.S.
IPO Planned, $100 Billion Valuation
The CNBC article cites “people familiar with the matter” when making its claims, but Facebook declined to comment to news outlets pursuing the story. However, we’ve known for some time that an IPO was in Facebook’s near future. Chief Operating Officer Sheryl Sandberg said at a meeting last month that an IPO was “inevitable,” notes CNBC.
Even as far back as September 2010, Facebook board member, venture capitalist and early investor Peter Thiel told reporters that Facebook was likely to go public in 2012. He, however, had pegged “late 2012” as the time frame for that.
Reports of Growth Slowdown
Facebook was also making news this week due to a separate report from Inside Facebook which states that the social network’s growth has slowed down in the markets where it has been available the longest, most notably in the U.S. Here, a drop of nearly 6 million users was seen over the month of May, going from 155.2 million users to 149.2 million by month-end. Canada also fell by 1.52 million users, down to 16.6 million, while the United Kingdom, Norway and Russia all lost over 100,000 users each, during the same time.
Facebook responded to these claims, saying that:
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 on any given day.”
In light of Facebook’s response, Inside Facebook also compared its findings (which do come from direct measurements using Facebook’s advertising tool) to other third-party services. While nothing matched up exactly, the general trends showed that in some of the social network’s early adopting countries like the U.K. and Canada, gains and losses started in 2010, but growth up until then had been steady. In the U.S., fewer monthly users were seen at the beginning of the year by most of the third party services, and only one showed any growth in the disputed month of May.
Facebook Hasn’t Peaked
Still, it’s far too soon to say the social network has hit its peak, some experts say. In a report on PEHub, for example, social media analyst Lou Kerner of Wedbush Securities noted that the Inside Facebook report doesn’t include data about increasing page views or frequency of visits, both of which help gauge the “vibrancy of a website.” (Note: Kerner owns shares of Facebook).
And digital media analyst Greg Sterling said that he would need to see “at least three more months of hard, detailed data, to suggest that Facebook’s best days are now behind it.”
That said, Sterling still thinks the site may be vulnerable. “[Facebook CEO] Mark Zuckerberg has characterized Facebook as a utility — a communications utility — but I’d argue that it hasn’t yet made itself into one the way that Google has,” Sterling told PEHub. “In the same same way that we joined Facebook because our friends did, we’re likely to leave if those same friends become less engaged,” he says.
The data pointing to slowdowns is definitely questionable, we think. Even Inside Facebook reports that “a person close to the company” says the site is still growing in the U.S. And Facebook is on track to reach 700 million users, thanks to growth in newer markets.
Plus, there is still China, population 1.3 billion. Facebook may be planning to enter that market through a relationship with Chinese search company Baidu in order to launch a new, separate and more tightly controlled social networking service, which may or may not connect with Facebook as it exists today.
