Facebook, the booming social network with more than 600 million users, will be forced to either go public by the end of 2012 or begin disclosing financial information to the Securities and Exchange Commission, according to plans laid out in a 101-page prospectus being shown to potential investors.
In the document, Facebook says it expects to cross the critical 500-shareholder mark this year, and if it finishes the year over the line, it must file quarterly and annual reports with the SEC within 120 days after the end of the year. Copies of the prospectus were obtained by The Wall Street Journal and Reuters.
According to federal law and SEC rules, any company with more than 500 shareholders and over $10 million in assets must file financial reports with the government.
Google hit the 500-shareholder threshold in 2003. The company went public in 2004 at an offering price of $85 per share. Google shares closed at $613.50 in Thursday.
Facebook is worth $50 billion, according to Wall Street titan Goldman Sachs, which is investing $450 million in the social networking website and raising at least $1.5 billion more from its wealthy clients.
The apparent countdown to a 2012 Facebook IPO or registration with the SEC may dampen criticism that Goldman’s fund is designed to circumvent the 500-shareholder rule because Goldman’s clients wouldn’t technically be counted as shareholders.
The document reveals — for the first time — hard, though unaudited, details about Facebook’s financial performance. Through the first three quarters of 2010, Facebook earned profit of $355 million on revenue of $1.2 billion, according to a Reuters account of the prospectus.
That means the company would have had to have earned $145 million on revenue of $800 million in the fourth quarter to reach the $500 million and $2 billion full-year figures that many industry analysts had expected.
Ryan Jacob, of the Jacob Internet Fund, predicted to Reuters that Facebook’s net income could reach as high as $800 million or $1 billion in 2011. The prospectus also reveals that Facebook has over 600 million users.
It’s that kind of growth that has so many of Goldman’s wealthy clients clamoring to get a piece of the action. The bank had planned to raise $1.5 billion but was so inundated with interest from its clients that it stopped taking orders at the $2 million minimum investment level and said it would close the fund early.
Via: Wired.com
