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Facebook Delaying Wall Street Debut

April 26, 2012

Facebook may be delaying the social network’s Wall Street debut until June because it isn’t prepared for its Initial Public Offering (IPO), according to a CNBC report.

The report said, citing people familiar with the matter, that Facebook founder and CEO Mark Zuckerberg has been so focused on acquisitions that his company isn’t prepared for the big stage on Wall Street yet.

The company acquired photo sharing application Instagram earlier this month for $1 billion.  It also announced on Monday that it would pay $550 million for hundreds of patents from Microsoft.

CNBC reported that the company won’t likely launch its IPO until May 14 , at the earliest, and could even be pushed back until early or mid-June.

The company is planning for a plan A, B, C, and D for how and when to make its debut on Wall Street, according to CNBC.

Facebook also reported its first quarter-to-quarter revenue slide recently, leaving some to speculate that it is a sign the social network’s growth may be slowing down.

The slide is the first quarter-to-quarter revenue drop it has reported in the past two years.  The company blamed it on seasonal advertising trends.

Brian Wieser, an analyst with Pivotal Research Group, told Reuters that it could be cause for concern with investors.

“No matter how you slice it, for a company that is perceived as growing so rapidly, to slow so much on whatever basis – sequentially or annually – it will be somewhat concerning to investors if faced with a lofty valuation,” he told Reuters reporters Alexei Oreskovic and Alistair Barr.

Facebook is expected to raise at least $5 billion in its IPO, which could value the social network up to $100 billion.

The company wrote in an updated filing with the U.S. Securities and Exchange Commission (SEC) that it surpassed 900 million monthly active users in the first quarter, and its full-time staff grew by about 1,100 employees to 3,549 in the past 12 months.

Facebook also said that it has agreed to pay Instagram $200 million if the company’s acquisition does not go through.

The social networking site already paid $300 million in cash for Instagram, along with 23 million shares of Class B common stock, which were valued at $30.89 per share.

Facebook’s revenue declined $1.06 billion in the three months ended March 31, which is a 6 percent decline from the fourth quarter.

“It was bound to happen. You are going to see a slowdown,” Anupam Palit, an analyst at GreenCrest Capital LLC, told Reuters.

Facebook gets most of its revenue from advertising, but it has a business centered around its virtual currency used to buy virtual goods within social games.  Facebook earns up to 30 percent from virtual goods sold on its platform.

“In the future, if we extend Payments outside of games, the percentage fee we receive from developers may vary,” the company said in its IPO filing on Monday.


Source: RedOrbit Staff & Wire Reports



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