Market Overview

No Facebook IPO? No Problem

No Facebook IPO? No Problem

Facebook may not have had its IPO yet, but that hasn't stopped investors from flocking to the company.

Over the past month, the social networking site has been doing well, thanks to a sale by Accel Partners (a venture capital firm that sold less than 15% of its stake in Facebook for a reported $517 million), which resulted in reports that the company had been valued at roughly $35 billion.

The Wall Street Journal says that soon after the sale, Facebook's price and trading volume surged on SharesPost, an online marketplace for private investments, and SecondMarket, a registered broker-dealer for illiquid, restricted and alternative investments.

SharesPost claims that, based on transactions through its exchange, Facebook's average valuation has risen almost 25% in the last month. SecondMarket, meanwhile, says that Facebook's valuation has risen 12%.

According to the Wall Street Journal, private exchanges differ from public exchanges in that they take shares directly from sellers or companies and actively search for buyers. To simplify the matching process, SharesPost and SecondMarket have begun to offer auctions of stock in private companies.

And Facebook isn't the only private company investors are after: Twitter, LinkedIn and Zynga Inc. have also been attracting quite a bit of attention.

But while there are have been reports that Facebook could go public in 2012, there are no such indicators for Twitter, the other social networking giant.

In 2010, the value of transactions in private-company shares more than doubled to $4.9 billion – up from $2.4 billion in 2009. SecondMarket said that Facebook accounted for 48% of its private-company transactions. On SharesPost, the Mark Zuckerberg enterprise accounted for 40% of private-company transactions.

If and when Facebook goes public, it should be interesting to see how it stacks up against other social media giants, such as Inc. (NYSE: YOKU).


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Posted-In: Accel Partners Facebook Mark Zuckerberg private-company transactionsLong Ideas News Short Ideas Trading Ideas

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