Facebook trade halt raises IPO hopes

Facebook is suspending the completion of trades of its stock on the private secondary market until the end of the week, according to two people familiar with the matter.

The US social network has previously suspended trading to review its shareholder list but this pause raises expectations that the company will soon file its registration papers for a public offering.

From January 25 until January 27, buyers and sellers can arrange trades on the secondary market as usual, but Facebook attorneys will not approve the transactions until next week, the people said.

Companies may freeze stock trades before a material announcement, such as an IPO filing or an acquisition, to protect themselves against liability, said Sam Hamadeh, chief executive of PrivCo, a company that researches private companies.

Facebook’s highly anticipated IPO is expected to be one of the largest ever, with some estimates putting a $100bn valuation on the company at the time of the public offering. SharesPost, a group that facilitates the sale of private company shares, lists Facebook’s valuation at $80bn, based on recent trade data.

Mr Hamadeh said: “There’s been so much expectation for two years, that any day now, Facebook is going to file. A lot of that has been wishful thinking, or hyping the stock.

“This is the first, confirmed, verifiable signal to us that this is very real.”

Neither Groupon, the daily deals company, nor Zynga, the online social gaming company, suspended trading before their IPOs.

However, Jive, which makes collaboration software, and Angie’s List, which compiles consumer reviews, both suspended trading before listing, Mr Hamadeh said.

Facebook has kept very quiet about its business, not revealing any details about its revenues, while intermittently announcing user growth – 800m at last count.

The company is likely readying itself for battle with US regulators over what it will be required to disclose, from user rates to advertising rates, all things investors have also been keen to see.

“I think Facebook’s IPO will be a fireworks display of success,” said David Kirkpatrick, author of The Facebook Effect.

SharesPost and Facebook all declined to comment.

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