With Facebook's valuation scaling to $50 billion and Goldman Sachs anteing up $450 million for a private IPO with the social network, things are heating up as social media start testing the "Wall Street" waters. Book runners with the financial heft of Morgan Stanley, Bank of America and JP Morgan are rumored to be squiring LinkedIn in an attempt to beat Facebook to the public offering punch.
Reid Hoffman & Mark ZuckerbergA Reuters report notes that LinkedIn has already chosen financial underwriters, a precursor to making an offer. Their motive: Become the social network IPO leader before Facebook sucks all of the oxygen out of the room.
"Some of these companies want to go public because they want to beat Facebook and others out," said one of the sources. "If Facebook went public before Linkedin, do you think anyone would pay that much attention to Linkedin? You might want to surpass the beast."
LinkedIn's founder, Reid Hoffman was quoted in February, 2009 saying that his network could go public at any time, but he has held out for the last two years as a private company. However, this year, those familiar with the IPO process feel that LinkedIn is prime to attract investors based on its reputation as one of the Web's fastest growing social networks.
LinkedIn Premium AccountsAccording to Marshall Kirkpatrick at ReadWriteWeb, while LinkedIn lacks the cache of Facebook's mass appeal, its 'business networking' focus has signed up many of its 85 million members who are now paying for premium accounts and whose demographics skew predominantly toward the upper-middle class. As a result, the network produces a very lucrative advertising stream of revenue.
While Facebook board member Peter Thiel told Reuters that FB is not expected to file for a public offering until late 2012, the SEC is reviewing whether the number of shareholders in Facebook has exceeded the 499 limit in order to remain private. If it's determined that FB has moved past that benchmark, it's very possible Facebook will be forced to go with an IPO in 2011. But, at this time, Mark Zuckerberg is holding that news close to his chest.
For those that want to run out tomorrow and starting queuing up for a LinkedIn IPO, be aware that a filing of a S-1 registration statement with the US Securities and Exchange Commission (which contains the basic financial data of an issuer) could take months. And presently the valuation of a LinkedIn IPO was not given by the sources.
As far as other social media services jumping into the fray, news reports have indicated that Groupon will remain a private company, after turning down a 6 billion acquisition offer from Google - and don't expect Twitter to be tweeting about an initial public offering any time soon. The microblogging platform has raised another $200 million so it can keep growing in the short term with the assistance of Main Street advertisers versus Wall Street's financial interloping involvement.