Facebook prepping for an IPO, as value reaches nearly $10 billion

Posted Nov 19th 2009 10:30AM by Tom Taulli
Filed under: Google (GOOG)

Wednesday's strong IPO of Fortinet is yet another sign that investors are warming up to early-stage deals -- especially of fast-growing companies.

So does this mean we'll see a public offering of a company like Facebook?

Maybe so. According to Bloomberg News, there has been lots of activity in the private shares of Facebook, which have spiked 42% over the past couple months. The valuation now comes to about $9.5 billion.

OK, if Facebook is not public yet, how do the shares trade? Well, there are several virtual exchanges -- such as SecondMarket and SharesPost -- that allow insiders to unload their positions.

There are many reasons for the higher valuation. For example, Facebook continues to dominate the social networking space with more than 300 million registered users. What's more, the company is cash-flow positive and expects to generate $500 million in revenues this year.

Of course, these are the kinds of things IPO investors salivate over. In fact, Facebook has the makings of a Google-style (GOOG) IPO, which hit the market in 2004 at a valuation of $23 billion. Now, Google is worth about $180 billion.

While it's impossible to say that Facebook will have similar performance, the fact is that an IPO would be a huge event.

Tom Taulli is the author of various books, including The Complete M&A Handbook.

Tags: Facebook, featured, Fortinet, initial publich offering, InitialPublichOffering, IPO