Facebook Valued at $102.8 Billion in Last SharesPost Auction
Facebook Inc. (FB)'s implied valued rose 8.9 percent to $102.8 billion in what is expected to be the last auction of its stock on SharesPost Inc.'s exchange before the social-networking company's initial public offering.
Context & Ripple Effects
Facebook's private valuation has climbed steadily through the secondary market — $56 billion in a significantly oversubscribed auction in December 2010, then $87.5 billion by May 2011 — and the latest SharesPost clearing pushes it past $100 billion for the first time. An 8.9% rise this late in the cycle matters less for the level than for the timing: this is expected to be the final auction before an IPO, so it functions as a last private-market read on demand.
The story travelled widely on pickup day — Los Angeles Times, VentureBeat, The Next Web and others all ran it — reflecting how closely every print in these auctions was being watched as a proxy for where the IPO might land.
First-order effects
- Pre-IPO shareholders get their last organized secondary-market exit at a $102.8 billion mark-up; after this auction, liquidity shifts entirely to the public offering process.
- The auction hands Facebook's bankers a fresh, arms-length price point to anchor IPO marketing against, weeks before roadshow pricing.
Second-order effects
- SharesPost loses its marquee listing — the company whose repeated auctions built the exchange's profile — forcing it to prove depth with the rest of its late-stage book.
- Other late-stage private companies gain a demonstrated template: run periodic auctions to set marks and satisfy shareholder demand rather than raising new primary rounds just to refresh the price.
Third-order effects
- If the pattern holds, secondary exchanges like SharesPost become standing price-discovery venues that compress the information gap between private and public markets, pressuring issuers and underwriters to treat auction prints as quasi-official benchmarks.
- A sustained $100-billion-plus private valuation for one company also strengthens the case among later startups and their investors for staying private longer, since late-stage liquidity no longer requires an immediate IPO.
The trend: Private-company share auctions are maturing into de facto pre-IPO price discovery, with each successive mark narrowing the distance between the secondary market and the offering itself.