Despite the lack of evidence, there will be a Facebook IPO before 2012, as both the buzz and the pre-IPO price of the company continue to build steam. Pre-IPO price? Yup, there's a way to get long Facebook before the most hyped company in the history of hype decides to grace us with an IPO.
Breakout asked David Weir, the CEO of SharesPost.com, a company that facilitates trades in private companies, to tell us how the process works.
SharesPost and companies like it are carving out a niche by giving employees and former employees of private companies a chance to gain liquidity by selling some or all of their shares to institutions or accredited investors (people with a net worth more than $1 million in assets and over $200,000 in annual income).
So those are the rules, now what's the deal on Facebook? Weir's firm auctions Facebook on a regular basis. The most recent auction priced Facebook at $35 a share, putting the implied valuation of the king of the social networks "somewhere in the high $70 billion area," he says. Unquestionably $70 billion is a nice area if you can afford it, but how would an individual investor know whether that seems high or low, given the lack of public information available?
While the people who work or have worked for Facebook have a huge informational advantage when it comes to the inner workings of the company, SharesPost provides a slew of independent research to help close the gap. NeXtup Research, a firm that analyzes private companies, provides research for any registered member of SharesPost (which can be joined for free). SharesPost also provides historical transaction volumes, prices and other information to its members.
Alas, you can lead a buyer to research but you can't make him read it. Weir tells us the value of Facebook by NeXtup's estimation is closer to $50 billion than it is to the aforementioned high $70 billion area. Only time will tell whether the markets or NeXtup is closer to the truth.
Is this trading in private Internet companies proof of the next bubble, or business as usual in the trading world? We want to know what you think. Put a comment in the space below or drop us an email at email@example.com
- accredited investors