Facebook set to fire the starting gun on its mega flotation

Stephen Foley

Stephen Foley is Associate Business Editor of The Independent, based in New York. In a decade at the paper, he has covered personal finance, the UK stock market and the pharmaceuticals industry, and been the Business section's share tipster. And since arriving with three suitcases in Manhattan in January 2006, he has witnessed and reported on a great economic boom turning spectacularly to bust. In March 2009, he was named Business and Finance Journalist of the Year at the British Press Awards.

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Facebook's internet rivals could have the chance to pore over the company's secret financial results for the first time next week, as the social networking giant puts the finishing touches to its flotation prospectus.

The company is expected to file paperwork for a $75bn-$100bn stock market valuation within days, perhaps as early as Wednesday, firing the starting gun on what is likely to be the hottest internet offering since the dot.com bubble.

It could also be one of the largest share offerings of all time, if reports of a $10bn share sale are correct. Among US companies, only Visa, AT&T and General Motors raised more.

The prospectus will make public for the first time the scale of the profits that Facebook is reaping from adverts placed on its site. Advertisers have been clamouring to reach the site's 800 million users, and the large amount of data that Facebook has collected about those users has enabled it to target specific ads for specific groups of people – a skill that advertisers for which advertisers are willing to pay top dollar.

Rumours in Silicon Valley – and analyses by ad industry experts – suggest that Facebook had revenues of about $3.8bn last year and made an operating profit of $1.5bn, but the world's largest advertising firms and Facebook's internet rivals, such as Google and LinkedIn, are itching to see the real numbers.

The prospectus will also reveal the exact size of the stake held by founder Mark Zuckerberg and some star investors, including Napster founder Sean Parker and libertarian hedge fund manager Peter Thiel, who backed the company when it was still a startup. Mr Zuckerberg, who founded Facebook seven years ago in his Harvard dorm room, could be worth $24bn on paper, if the company hits the top of the range of forecasts for its value, which would make him richer than the founders of Google and established media tycoons such as Rupert Murdoch.

That will depend on demand, but the reaction among stock market investors yesterday suggested intense excitement about the Facebook offering. Speculators wagered that the arrival of the dominant social networking company will boost valuations of smaller rivals and other internet businesses. Shares in Zynga, which develops online games for Facebook users, LinkedIn, the professional networking site, and Groupon, the online marketing firm, all soared within minutes of a Wall Street Journal report that revealed Facebook's Wednesday filing plan.

It was not clear last night if Facebook has finalised its roster of financial advisers for the deal. Morgan Stanley is favourite to lead the offering, though Goldman Sachs – which raked in $1.5bn for Facebook in a private fundraising last January – is also expected to have a large role among the banks underwriting the share issue.

The company has also not yet decided whether to list its shares on the New York Stock Exchange or on the technology-focused Nasdaq, which was the exchange of choice for dot.com companies during the boom of the late Nineties.